social responsibility · the concept of corporate social responsibility is potentially very wide...

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

UNCTAD Serieson issues in international investment agreements

UNITED NATIONSNew York and Geneva, 2001

SOCIAL RESPONSIBILITY

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NOTE

UNCTAD serves as the focal point within the United Nations Secretariatfor all matters related to foreign direct investment and transnational corporations.In the past, the Programme on Transnational Corporations was carried out by theUnited Nations Centre on Transnational Corporations (1975-1992) and the TransnationalCorporations and Management Division of the United Nations Department of Economicand Social Development (1992-1993). In 1993, the Programme was transferred tothe United Nations Conference on Trade and Development. UNCTAD seeks to furtherthe understanding of the nature of transnational corporations and their contributionto development and to create an enabling environment for international investmentand enterprise development. UNCTAD's work is carried out through intergovernmentaldeliberations, research and analysis, technical assistance activities, seminars, workshopsand conferences.

The term “country” as used in this study also refers, as appropriate, to territoriesor areas; the designations employed and the presentation of the material do notimply the expression of any opinion whatsoever on the part of the Secretariat ofthe United Nations concerning the legal status of any country, territory, city or areaor of its authorities, or concerning the delimitation of its frontiers or boundaries.In addition, the designations of country groups are intended solely for statisticalor analytical convenience and do not necessarily express a judgement about thestage of development reached by a particular country or area in the developmentprocess.

The following symbols have been used in the tables:

Two dots (..) indicate that data are not available or are not separately reported. Rowsin tables have been omitted in those cases where no data are available for any ofthe elements in the row;

A dash (-) indicates that the item is equal to zero or its value is negligible;

A blank in a table indicates that the item is not applicable;

A slash (/) between dates representing years, e.g. 1994-95, indicates a financial year;

Use of a hyphen (-) between dates representing years, e.g. 1994-1995, signifies thefull period involved, including the beginning and end years.

Reference to “dollars” ($) means United States dollars, unless otherwise indicated.

Annual rates of growth or change, unless otherwise stated, refer to annual compoundrates.

Details and percentages in tables do not necessarily add to totals because of rounding.

The material contained in this study may be freely quoted with appropriateacknowledgement.

UNCTAD/ITE/IIT/22

UNITED NATIONS PUBLICATIONSales No. E.01.II.D.4ISBN 92-1-112514-6

Copyright © United Nations, 2001All rights reserved

Printed in Switzerland

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IIA Issues Paper Series

The main purpose of the UNCTAD Series on issues ininternational investment agreements – and other relevantinstruments – is to address concepts and issues relevant tointernational investment agreements and to present them ina manner that is easily accessible to end-users. The series coversthe following topics:

Admission and establishmentCompetitionDispute settlement (investor-State)Dispute settlement (State-State)EmploymentEnvironmentFair and equitable treatmentForeign direct investment and developmentHome country measuresHost country operational measuresIllicit paymentsIncentivesInternational investment agreements: flexibility for developmentInvestment-related trade measuresLessons from the MAIMost-favoured-nation treatmentNational treatmentScope and definitionSocial responsibilityState contractsTaking of propertyTaxationTransfer of fundsTransfer of technologyTransfer pricingTransparencyTrends in international investment agreements: an overview

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PrefaceThe secretariat of the United Nations Conference on Trade

and Development (UNCTAD) is implementing a work programmeon international investment agreements. It seeks to helpdeveloping countries to participate as effectively as possiblein international investment rule-making at the bilateral, regional,plurilateral and multilateral levels. The programme embracescapacity-building seminars, regional symposia, training courses,dialogues between negotiators and groups of civil society andthe preparation of a Series of issues papers.

This paper is part of that Series. It is addressed togovernment officials, corporate executives, representatives ofnon-governmental organisations, officials of international agenciesand researchers. The Series seeks to provide balanced analysesof issues that may arise in discussions about internationalinvestment agreements. Each study may be read by itself,independently of the others. Since, however, the issues treatedclosely interact with one another, the studies pay particularattention to such interactions.

The Series is produced by a team led by Karl P. Sauvantand Pedro Roffe. The principal officer responsible for itsproduction is Anna Joubin-Bret who oversees the developmentof the papers at various stages. The members of the team includeS. M. Bushehri, Patricia Mira Pontón, Aimé Murigande andJörg Weber. The Series' principal advisors are Arghyrios A.Fatouros, Sanjaya Lall, Peter T. Muchlinski and Patrick Robinson.The present paper is based on a manuscript prepared by PeterT. Muchlinski and Sol Picciotto. The final version reflectscomments received from Marino Baldi, Werner Corrales, WilliamDymond, Rainer Geiger, Felipe Jaramillo, Georg Kell, John Kline,Stephen Pursey, Mansur Raza, Homai Saha, Chak Mun See,Marinus Sikkel and Andreas Ziegler. The paper was desktop-published by Teresita Sabico.

Rubens RicuperoGeneva, April 2001 Secretary-General of UNCTAD

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Acknowledgments

UNCTAD's work programme on international investmentagreements is implemented by a team of UNCTAD staff membersand consultants headed by Karl P. Sauvant, Khalil Hamdani andPedro Roffe and including Marianela Bruno-Pollero, S.M. Bushehri,Arghyrios A. Fatouros, John Gara, Anna Joubin-Bret, Sanjaya Lall,Patricia Mira Pontón, Peter T. Muchlinski, Aimé Murigande, PatrickRobinson and Jörg Weber. Administrative support is provided byHélène Dufays-Budhdeo and Séverine Excoffier.

UNCTAD has carried out a number of activities relatedto the work programme in co-operation with other intergovernmentalorganizations, including the Secretariat of the Andean Community,l'Agence pour la Francophonie, the Inter-Arab Investment GuaranteeCorporation, the League of Arab States, the Organization of AmericanStates, la Secretaria de Integración Económica Centroamericanaand the World Trade Organization. UNCTAD has also cooperatedwith non-governmental organizations, including the GermanFoundation for International Development, the Centro de EstudiosInterdisciplinarios de Derecho Industrial y Económico – Universidadde Buenos Aires, the Consumer Unity and Trust Society – India,the Economic Research Forum – Cairo, the European Roundtableof Industrialists, the Friedrich Ebert Foundation, the InternationalConfederation of Free Trade Unions, Oxfam, SOMO – Centre forResearch on Multinational Corporations, the Third World Network,la Universidad del Pacifico, the University of the West Indies, andWorld Wildlife Fund International.

Funds for the work programme have so far been receivedfrom Australia, Brazil, Canada, France, Japan, the Netherlands,Norway, Sweden, Switzerland, the United Kingdom and the EuropeanCommission. Countries such as China, Egypt, Guatemala, India,Jamaica, Morocco, Peru, Sri Lanka and Venezuela have alsocontributed to the work programme by hosting regional symposia.All of these contributions are gratefully acknowledged.

Table of contents

Page

Preface ................................................................................. iv

Acknowledgements ............................................................ v

Executive summary ............................................................ 1

INTRODUCTION .............................................................. 3

I. EXPLANATION OF THE ISSUE .............................. 5

II. STOCKTAKING AND ANALYSIS .......................... 17

A . Development obligations .................................................... 17

B. Socio-political obligations ................................................... 22

C. Consumer protection ............................................................. 25

D . Emerging issues ....................................................................... 351. Corporate governance ..................................................... 352. Ethical business standards ............................................. 373. Observance of human rights ......................................... 40

III. INTERACTION WITH OTHER ISSUESAND CONCEPTS ...................................................... 47

CONCLUSION: ECONOMIC AND DEVELOPMENTIMPLICATIONS AND POLICY OPTIONS ..................... 53

References ........................................................................... 63

Selected UNCTAD publications on transnationalcorporations and foreign direct investment ...................... 71

Questionnaire ..................................................................... 83

Social Responsibility

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Page

Boxes

1 . Principal obligations of TNCsin the draft United Nations Code ofConduct on Transnat ional Corporat ions ........................ 6

2 . The OECD Guidelines forMult inat ional Enterpr ises ...................................................... 7

3 . A compact for the new century ........................................... 94 . Development obl igat ions imposed on

regional mult inat ional enterprises ininves tment promot ion agreementsbetween developing countr ies ............................................. 19

5 . OECD Guidelines for Mult inat ionalEnterprises and the protect ion ofconsumer interests ..................................................................... 28

6 . Examples of ethical codes of conduct .............................. 387 . Human r ights and labour r ights ......................................... 428 . Amnesty In terna t ional Human

Rights Guidelines for Companies ...................................... 44

Table

1 . Interaction across issues and concepts ............................ 47

Executive summary

The social responsibili ty of corporations, includingtransnational corporations (TNCs), is typically not addressedin most international investment agreements (IIAs).Nonetheless, i t is a question that has been raised throughthe adoption, since the 1970s, of international codes of conductfor TNCs. More recently, it has been addressed in a numberof international fora and the United Nations Global Compact.The concept of corporate social responsibility is potentiallyvery wide and may encompass most matters pertaining tothe economic and social impact of TNCs. However, a morespecialized approach to this concept is emerging. As a result,a number of aspects — including development obligations,socio-political obligations and consumer protection — havereceived some at tention, and others (especial ly corporategovernance, ethical business standards and the observanceof human rights) seem to be emerging issues. These mattersconstitute the focus of the present paper. This is in additionto obligations part icularly as regards the environment andemployment issues, which are sufficiently developed in relationto their operation in international investment instrumentsto deserve separate study in other papers in this Series.

Given that the issues covered by this paper are relativelynew to IIAs, but that their content is already developed inother instruments and codes of conduct, the stocktaking insection II draws not only on IIA provisions but also onprovisions in other instruments that offer examples of thetypes of provisions that may be used to operationalize socialresponsibility obligations.

Social responsibility obligations interact with a numberof other concepts , including taxat ion, t ransfer pricing,competition, transfer of technology, employment, environment,i l l ici t payments and transparency. These interactions areconsidered in section III . As such, social responsibil i typrovisions interact with a great number of other issues tobe found in IIAs.


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The concluding section considers economic and developmentimplications, particularly policy options. The challenge is to balancethe promotion and protection of liberalized market conditions forinvestors with the need to pursue development policies; socialresponsibility obligations are one way to move towards such abalance. Above all, social responsibility standards must be appliedwith sensitivity to the realities of local conditions in developingcountries and should not be misused for protectionist purposes.In this light, the policy options discussed range from an absenceof any reference to social responsibility in IIAs to the inclusionof non-binding standards through the reservation of regulatorypowers in relation to social responsibility to the use of a nolowering of s tandard clause, home country promotionalmeasures and, lastly, the inclusion of generally binding socialresponsibility provisions.

INTRODUCTION

Corporate social responsibility is a well-known conceptin national law. Its origins can be traced to the rise of moderncorporat ions whose shares can be f reely t raded on s tockmarkets . This has necessi tated a degree of protect ion forshareholders, who need sufficient and accurate informationabout the performance of companies as a guide to theirinvestment decisions. This in turn has led to comprehensivelaws on shareholder protection, both through the regulationof governance s tructures and disclosure regimes undercompany laws and through specialized securities laws thatgovern the t rading of s tocks and shares.

However, new issues of corporate social responsibilityhave emerged. No longer are companies regarded as beingresponsible to shareholders alone, although this concept stillholds a central posit ion in legal systems. For example,responsibil i ty to employees and other “s takeholders” i n acompany is a concept that has gradually been gaining groundin national laws. Furthermore, wider issues, such as the needfor companies to take active and responsible steps to minimizepollution, to protect consumer interests, to refrain from illicitpractices or to observe fundamental ethical and human rightsstandards, have also inspired new regulatory init iat ives.

These national trends are beginning to have an impactat the international level as well. The aim of this paper isto examine how far issues of corporate social responsibilityhave found their way into the provisions of internationalinvestment agreements (IIAs). Although not a central featurein most IIAs, social responsibil i ty provisions seem to beincreasingly in evidence, especially in relation to labour,environmental and consumer protection questions. However,as sections I and II will show, there are a number of otherissues that come under the umbrella of social responsibility.Defining the boundaries of this concept is thus the first taskof this paper, and is addressed in section I .



Section II analyses existing provisions in IIAs that coverthe defined field. These may take the form of non-bindingor binding clauses; they may be addressed to Governments,to Governments and enterprises, or to enterprises alone, andmay be generated by intergovernmental organizations, nationalGovernments , t ransnat ional corporat ions (TNCs), industrygroups, employers’ associations, or civil society groups actingthrough non-governmental organizations (NGOs) or tradeunions. The implications of these al ternative sources areconsidered. Section III looks at interactions between the conceptof social responsibil i ty and other IIA issues, while theconcluding section outl ines policy options for negotiatorsin this field.

Section I

EXPLANATION OF THE ISSUE

Corporate social responsibility is at the heart of theobligations that f irms owe to the societ ies in which theyoperate. 1 This relationship is further accentuated and sensitizedwhen the firms involved are foreign affiliates of TNCs. Suchobligations can be seen as the quid pro quo for the protectionof investors and investments under IIAs, should the negotiatingparties to an IIA seek such a balance of r ights andresponsibilities for investors and their investments. However,i t may also be argued that such responsibil i t ies amount tocorporate duties that should be discharged independentlyof the protection given by host countries to foreign investment.

What precisely is meant by social responsibility inthe context of IIAs? This issue can be considered in the broadercontext of the overall obligations of TNCs, and these can bedrawn rather widely. For instance, the draft United NationsCode of Conduct on Transnational Corporations 2 (which wasnever adopted) lists the obligations of TNCs across a widerange of issues relat ing to such matters as respect for thesovereignty of the host State and its political system, respectfor human rights, abstention from corrupt practices, refrainingfrom using their economic power in a manner damaging tothe economic well-being of the countries in which they operate,including observance of tax and anti-monopoly laws, andensuring full disclosure concerning their activities. (A fulll isting of the matters covered by the draft United NationsCode of Conduct is given in box 1.) A similar list of obligationsis to be found in the (voluntary) OECD Guidelines forMultinational Enterprises, which were revised in 2000 (box2).



Box 1. Principal obligations of TNCs in the draft United NationsCode of Conduct on Transnational Corporations

The Code of Conduct lists the obligations of TNCs under thegeneral heading of “Activities of Transnational Corporations”,comprising three subheadings. Under the subheading “Generaland political”, the following are found:

• “respect for national sovereignty and observance of domesticlaws, regulations and administrative practices;”

• “adherence to economic goals and development objectives,policies and priorities; ”

• “review and renegotiation of contracts;”

• “adherence to socio-cultural objectives and values;”

• “respect for human rights and fundamental freedoms;”

• “non-collaboration by transnational corporations with racistminority regimes in southern Africa;”a

• “non-interference in internal political affairs;”

• “non-interference in intergovernmental relations;”

• “abstention from corrupt practices. ”

Under the subheading “Economic, f inancial and social”responsibilities come:

• the duty, by TNCs, to allocate their decision-making powersamong their entities so as to enable them to contribute tothe economic and social development of the countries inwhich they operate;

• observance of the balance of payments policies and financialtransactions policies of such countries;

• avoidance of transfer pricing practices;

• avoidance of corporate structures and practices aimed tomodify the tax base of the corporation contrary to nationallaws and regulations;

• observance of the principles concerning restrictive businesspractices and competit ion as contained in the Set of

/ . . .

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Section I

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Box 1 (concluded)

Multilaterally agreed Equitable Principles and Rules for theControl of Restrictive Business Practices adopted by theGeneral Assembly in resolution 35/63 of 5 December 1980;

• contribution to strengthening the technological capacities ofdeveloping countries in accordance with the practices andpriorities of these countries;

• observance of national consumer protection laws andregulations and international standards;

• observance of environmental protection laws and regulationsand international standards;

• take steps to protect the environment and make efforts todevelop and apply adequate technologies for this purpose.

The third subheading concerns “Disclosure of Information” andurges TNCs to disclose to the public in the countries in which theyoperate, by appropriate means of communication, full andcomprehensible information on the structure, policies, activitiesand operations of the TNC as a whole.

Source: UNCTAD, 1996, vol. I. pp. 161-171.a The apartheid regime in Southern Africa has since been abolished.

Box 2. The OECD Guidelines for Multinational Enterprises

II. General Policies a

“Enterprises should take fully into account established policiesin the countries in which they operate, and consider the views ofother stakeholders. In this regard, enterprises should:

1. Contribute to economic, social and environmental progresswith a view to achieving sustainable development.

2. Respect the human rights of those affected by their activitiesconsistent with the host government ’s internationalobligations and commitments.

/ . . .



Box 2 (concluded)

3. Encourage local capacity building through close co-operationwith the local community, including business interests, aswell as developing the enterprise’s activities in domestic andforeign markets, consistent with the need for soundcommercial practice.

4. Encourage human capital formation, in particular by creatingemployment opportunit ies and facil i tat ing trainingopportunities for employees.

5. Refrain from seeking or accepting exemptions notcontemplated in the statutory or regulatory frameworkrelated to environmental, health, safety, labour, taxation,financial incentives, or other issues.

6. Support and uphold good corporate governance principlesand develop and apply good corporate governance practices.

7. Develop and apply effective self-regulatory practices andmanagement systems that foster a relationship of confidenceand mutual trust between enterprises and the societies inwhich they operate.

8. Promote employee awareness of, and compliance with,company policies through appropriate dissemination ofthese policies, including through training programmes.

9. Refrain from discriminatory or disciplinary action againstemployees who make bona fide reports to management or, asappropriate, to the competent authorities, on practices thatcontravene the law, the Guidelines or the enterprise’s policies.

10. Encourage, where practicable, business partners, includingsuppl iers and sub-contractors , to apply pr inciples ofcorporate conduct compatible with the Guidelines .

11. Abstain from any improper involvement in local politicalactivities. ”

The OECD Guidelines also have an implementation mechanismwhich, among other things, can make use of National ContactPoints.

Source: OECD, 2000a, pp. 3-4.a The remaining chapters include “Disclosure”, “Employment and Industrial

Relations”, “Environment”, “Combating Bribery”, “Consumer Interests” ,“Science and Technology”, “Competition and Taxation”.

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Section I


As may be apparent from this wide-ranging list of issues,the precise classification of corporate social responsibility standardsis difficult, since the concept potentially covers all aspects ofcorporate behaviour. However, some typology is necessary sothat negotiators can have a more focused view as to what issuesfall under this general heading.

In this connection, the United Nations Secretary-General, Kofi Annan, in a speech to the World Economic Forumin Davos on 31 January 1999, challenged world business leadersto “embrace and enac t”, both in their individual corporatepractices and by supporting appropriate public policies, nineuniversally agreed values and principles derived fromuniversally accepted United Nations instruments. He placedobservance of human rights, labour rights and environmentalprotection at the heart of a socially responsible agenda forglobal business (box 3). This list was not designed as a code,but as a “framework of reference to stimulate best practices ”,in order to bridge the legitimacy gap created by the rapidityof economic globalization outpacing “the ability of societiesand their political systems to adjust to them, let alone to guidethe course they take” (Annan, 1999). This is intended as aninter-agency activity of the United Nations (involving theInternational Labour Organization, the United NationsEnvironment Programme and the Office of the HighCommissioner for Human Rights) (Kell and Ruggie, 1999).

Box 3. A compact for the new century

The Secretary-General asked world business to uphold thefollowing:

1. The Universal Declaration of Human Rights

• support and respect the protection of international humanrights within their sphere of influence; and

• make sure their own corporations are not complicit in humanrights abuses.

/ . . .



Box 3 (concluded)

2. The International Labour Organisation’s Declaration onfundamental principles and rights at work

• freedom of association and the effective recognition of theright to collective bargaining;

• the elimination of all forms of forced and compulsory labour;

• the effective abolition of child labour; and

• the elimination of discrimination in respect of employmentand occupation.

3. The Rio Declaration of the United Nations Conference onEnvironment and Development

• support a precaut ionary approach to environmentalchallenges;

• undertake init iatives to promote greater environmentalresponsibility;

• encourage the development and diffusion ofenvironmentally friendly technologies.

Source: UNCTAD, based on Annan, 1999.

With regard to drawing up social responsibili typrovisions for IIAs, the key issues identified by the Secretary-General are by no means exhaustive (UNCTAD, 1999b). Otherissues of relevance to developing countries in particular(especially in the economic area) can be gleaned from theabove-mentioned draft United Nations Code of Conduct andthe OECD Guidelines for Multinational Enterprises. Theyinclude technology transfer, training of the local workforce,the importance of backward linkages and the promotion oflocal entrepreneurship. Equally, certain issues of interest toboth developing and developed countries regarding the properregulation of corporate behaviour are also present in the draftCode and the Guidelines. In particular, requirements regardingtransparency through corporate disclosure, accountabi l i ty

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Section I


through corporate governance structures to various stakeholdergroups, and ethical responsibility in relation to such mattersas illicit payments, advertising and product safety and qualitycould be included under the broad heading of socialresponsibi l i ty.

Thus, social responsibility may assume economic, social,political and ethical dimensions in that TNCs are expectedto conduct their economic affairs in good faith and inaccordance with proper standards of economic activity, whilealso observing fundamental principles of good socio-politicaland ethical conduct. Although the latter issue has been dealtwith in the past — as witnessed, for example, by the referencesto the observance of human rights and non co-operation withthe apartheid regime in South Africa in the draft United NationsCode of Conduct — it is receiving renewed emphasis today,as shown by the Secretary-General’s highlighting of theseissues. Such a position is also taken in the General Policiessection of the revised OECD Guidelines (box 2). On the otherhand, responsibilities in respect of economic matters (whichwere prominent in earlier years) are receiving less attention,in line with a general inclination in the economic sphere torely more on market forces. The rise of social, ethical andenvironmental concerns suggests , however, that , a certainre-balancing may eventually take place — if only becausemarket pressures may seek to protect their brand names bybehaving in a socially responsible manner and avoid beingcaught in a general impression that business is sociallyirresponsible because of the behaviour of firms.

Given the range of quest ions that come under theheading of “corporate social responsibil i ty”, they can notall be covered in one paper. Indeed, certain issues havegenerated sufficient IIA practice and/or are important enoughin their own right to deserve being dealt with in separatepapers in this Series. These include:

• environmental issues;• employment ;• transfer of funds;



• competition;• transfer pricing;• taxation;• technology transfer;• illicit payments;• transparency and disclosure; and• foreign direct investment and development.

These matters will therefore not be discussed in the presentpaper, although, brief references and illustrations taken fromthese other areas will be used where this adds to the clarificationof the issues discussed here.

The present paper focuses on certain specific questionsof social responsibility that extend the coverage of IIAs tomatters falling within the broad notions of developmentobligations, socio-political obligations, and the protectionof consumers. These can be briefly introduced as follows:

• Development obligations. Such obligations arise as aresult of TNCs potential impact on the economicdevelopment goals of the host countries in which theyoperate. In particular, countries seek to harness the economicresources of TNCs to help achieve such goals. On the otherhand, there is a danger that their weight may be appliedwithout due consideration of its effects on such goals.Consequently, certain development-oriented IIAs haveaddressed the issue by requiring enterprises to observedevelopment policy goals in their operations. Equally,non-governmental instruments have stressed the needfor TNCs to act in a manner consistent with developmentgoals. As discussed earlier, development obligations covera number of economic issues. Given their importance,they are dealt with in separate papers. The discussionbelow therefore focuses only on the broader concept ofdevelopment obligations.

• Socio-political obligations. Apart from employment issues,which (owing to their importance) are examined in a

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Section I


separate paper, 3 these cover such corporate responsibilitiesto host countries as non-involvement in a host country’spolitical processes, observance of the sovereignty andcultural integrity of host countries, and cooperation ingood faith with the economic and social policies of thosecountries. These obligations were included in various codesof conduct relating to TNCs developed during the 1970s,as a response to the perceived risk to host countrysovereignty and independence posed by powerful TNCs.

• Consumer protection. With the growth of internationalbusiness, consumer issues have, in their turn, taken onan increasingly international character, involving issuesrelating to, among others, marketing, product packaging,sales and safety. In response, a trend has developed inintergovernmental organizations dealing with specificconsumer-oriented issues towards drawing up codes ofconduct after consultation with experts, corporations, civilsociety and other interested parties, in areas that havebecome of central interest to society, given the potential(if not actual) harm that corporate activity could generatefor consumers in the area concerned. The best-knownexample is the WHO Code of Breast-milk Substitutes. Moregeneral initiatives have taken place at the level of the UnitedNations and the OECD. These will be examined furtherin section II below.

Three other areas are increasingly being addressedby firms in their own corporate codes and in national lawsconcerning corporate responsibi l i t ies , as well as in someinternational instruments. These emerging issues may wellbecome important in relation to IIAs in the years ahead:

• Corporate governance rules have more recently been setout in an OECD instrument. Corporate governance, asdefined in the OECD Principles, concerns primarily therelationships between a company’s management, its board,its shareholders and its other stakeholders. In the main,these relationships involve the governance of a corporation



for gain. However, the reference to “other stakeholders” introducesissues of corporate social responsibility, in that this term refersto other groups of persons interested in the operation of acorporation apart from its investors, namely employees, contractors,trade unions, consumers and consumer groups and the generalpublic at large. Indeed, the OECD Principles assert, in thePreamble, that “factors such as business ethics and corporateawareness of the environmental and societal interests of thecommunities in which it operates can also have an impacton the reputation and the long-term success of thatcompany” .

• Ethical business standards have hitherto generatednumerous corporate, industry, governmental andintergovernmental codes dealing not only with industry-specific matters but also, more broadly, general policiesof good corporate behaviour that seek to ensure an ethicalapproach to the conduct of business.

• The observance of human rights standards by TNCs hasgenerated a number of codes and guidelines emanatingfrom civil society groups, which require inter alia respectby TNCs for fundamental human rights in their relationswith local communities in the countries in which theyoperate, avoidance of complicity in human rights abusesand violations by the Governments of countries of thosecountries, and ensuring that corporate security policiesdo not violate human rights.

In each case, new transnational standards of good corporateconduct may be developed which may qualify the scope ofinvestor protection standards in IIAs, especially as regardsthe issue of home or host country regulation.

The next section of this paper provides a general surveyof these more specific measures or provisions covering socialresponsibili ty areas that are not dealt with in other papersin this Series.

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Section I


Notes

1 For a discussion of the concept of social responsibility and its implications,see UNCTAD, 1994 and 1999a, ch. XII.

2 Unless otherwise indicated, all instruments cited herein may be found inUNCTAD, 1996 and 2000b.

3 Particularly relevant here is the ILO’s “Tripartite Declaration of PrinciplesConcerning Multinational Enterprises and Social Policy”, adopted in 1977.In a sense, this instrument was one of the first “social responsibility codes”;it also included a follow-up mechanism.

Section II

STOCKTAKING AND ANALYSIS

Following on from the list of issues discussed in sectionI, this section analyses in more detail the substance of existingIIAs dealing with social responsibility. Overall, it needs tobe noted that the subject matter of this paper is conspicuousby its relative absence from IIAs. On the other hand, thereare numerous voluntary codes of conduct developed by TNCs,indust ry groups , employers’ organizations, NGOs andintergovernmental organizations that have produced standardsin this area and may help in creating an environment thatcould promote the wider acceptance of their provisions bythe international community. At the same time, however, careneeds to be taken that social responsibility standards are notabused for protect ionist purposes. While concentrat ingprimarily on the provisions of IIAs, this section will also drawon those other sources as necessary so as to provide a morecomplete picture of the types of issues that may arise inconnect ion with future IIAs.

A. Development obligations

Certain IIAs introduce positive, albeit voluntary,obligations upon enterprises to act in a manner consistentwith the development goals and policies of the developingcountries in which they operate. Thus the draft United NationsCode of Conduct on TNCs stresses, in paragraph 9, the needfor TNCs to carry out their activities in conformity with thedevelopment policies, objectives and priorit ies set out bythe Governments of the countries in which they operate. TNCsare, in addit ion, expected to work seriously towards theachievement of those objectives and to consult with thosecountr ies for that purpose. Similarly, the revised OECDGuidelines provide that enterprises should “contribute to



economic, social and environmental progress with a viewto achieving sustainable development” (OECD, 2000a, p. 3).This general commitment to sustainable development isaccordingly echoed in the Guideline on the environment, inwhich enterprises are required to take due account of theneed to protect the environment, and public health and safety,and generally conduct their activities in a manner contributingto the wider goal of sustainable development ( ibid. , p. 6).Likewise, the Guideline on Science and Technology exhortsenterprises to ensure that their policies in this area arecompatible with those of the countries in which they operateand that they contribute to the development of local andnational innovative capacity. In addition, where enterprisesgrant licences for the use of intellectual property rights, orotherwise transfer technology, they should do so on reasonableterms and condit ions and in a manner that contributes tothe long-term development prospects of the host country(ibid., p. 8). Finally, in relation to the Guideline on Disclosure,the OECD Commentary on the revised Guidelines notes thatenterprises may take special s teps to make informationavailable to communities that do not have access to printedmedia, for example poorer communities that are directlyaffected by the enterprise’s activities (OECD, 2000b, p. 6,para. 17).

In contrast to the voluntary provisions outlined above,a particular type of a binding, development-oriented clausecan be found in regional investment promotion agreementsentered into by developing countries inter se. Typically, suchagreements may offer preferential treatment for enterprisesestablished by regional investors from more than one membercountry. Such treatment is made conditional upon observance,by the enterprise in question, of the development objectivesof the member countr ies in which the enterprise operates .Failure to observe these objectives may lead to the withdrawalof privileged status for the enterprise.

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Section II


Box 4. Development obligations imposed on regionalmultinational enterprises in investment promotion

agreements between developing countries

• Community Investment Code of the Economic Community ofthe Great Lakes Countries (CEPGL) (1982), Article 19: theauthorized Community enterprise shall agree inter alia to“develop local resources; give priority of supply to CEPGLMember States in times of scarcity; give priority to exports toMember States of the goods produced”. The privileges of theenterprise may be revoked under the procedure outlined inArticles 50-53.

• Charter on a Regime of Multinational Industrial Enterprises(MIEs) in the Preferential Trade Area for Eastern and SouthernAfrican States (1990), Article 17: MIEs are obliged to implementa local value-added programme, an export programme and atraining programme. Under Article 19 MIEs must contribute to“a Special Development Tax for the benefit of the less developedMember States of the Preferential Trade Area”. Under Article20 the status of an MIE can be revoked for “a serious violationor a number of recurring violations of this Charter”.

• Agreement for the Establishment of a Regime for CaribbeanCommunity (CARICOM) Enterprises (1987): Article 3 providesfor a general power to determine the purposes and functions ofsuch an enterprise. Article 11 (2c) allows for the revocation ofsuch status where the enterprise carries out business in gross orpersistent violation of the Agreement.

Source: UNCTAD, 1996.

Another source for development oriented socialresponsibil i ty clauses can be found in instruments adoptedby NGOs. Thus, for example, the International Chamber ofCommerce’s Guidelines for International Investment of 1972,under the heading “Investment Policies ”, state that investorsshould consult over the proposed investment and i ts “fit”



with the economic and social development plans of hostcountries. Similarly, the Charter of Trade Union Demandsfor the Legislative Control of Multinational Companies drawnup in 1975 by the International Confederation of Free TradeUnions (ICFTU), lists in an Appendix on the Social Obligationsof Multinational Companies, three development-specificobl igat ions to be observed by such companies:

• to inform the authorities and trade unions of the homeand host countries as to their ongoing or planned activitiesfor the purpose of adjusting these to the economic andsocial planning of both countries;

• to use production methods and forms of cooperation thatare in harmony with the economic and social conditionsof the host country and contribute to a developmentconsistent with that country’s interests;

• to contribute to a development fund in developing hostcountries in which they operate.

Finally, the Pacific Basin Charter on International Investments,issued by the Pacific Basin Economic Council in 1995, underthe heading “Basic Principles”, asser ts that :

“International investors, in pursuit of their businessobjectives, should proceed in ways which willcontribute to economic and social development,particularly in host economies, and they shouldmaintain a sensitivity to changing domestic goalsand aspirations in all economies with which theyare concerned.”

There are also a number of instruments issued by NGOs thatinclude provisions declaring that TNCs should observe thegeneral development policies of the countries in which theyoperate. Thus:

• The Draft NGO Charter on Transnational Corporationsissued by the People’s Action Network to Monitor Japanese

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Transnational Corporations Abroad (PAN), in its Codeof Conduct for TNCs, asserts that TNCs should make everypossible effort to help develop the economic and socialindependence of the host country.

• The Polaris Institute of Canada, in its discussion paper“Towards a Citizens’ MAI ” includes within its “OperatingPrinciples” a section on corporate responsibilities whichhighlights certain social responsibilities that corporationsshould meet in return for their right to invest. First, theymust ensure that their investment is designed to servethe public interest by meeting performance requirementssuch as labour and environmental standards; second theymust recognize the right and responsibilities of Statesto protect, preserve or enhance strategic areas of theireconomies and the commons. Third, they must contributeto revenues through taxation that can be used for socialprogrammes, environmental projects, cultural initiativesand a variety of public services.

• The World Development Movement’s Core Standards of1999 include, under the heading “Sovereignty anddevelopment strategies ”, a section requiring TNCs to takeaccount of countries’ policy objectives, includingdevelopment and social priorities. They should pay dueregard to using technologies that generate employmentand consider giving contracts to local companies usinglocal materials and local processing.

Thus there are some significant models that may formthe basis of future clauses aimed at promoting corporate socialresponsibility in the area of development. As noted earlier,a number of IIAs also deal with specific economic issues interms of seeking to establish development obligations forTNCs. Given their importance, they are being dealt with inseparate papers .



B. Socio political obligations

Under this heading, IIAs have considered what isperhaps the most politically sensitive question to have emergedfrom the relat ionship between TNCs and developing hostcountries in particular. It concerns the question of how fara TNC can, or should, become actively involved in the internaland external political processes of a host country, and howfar it should respect the national, political, social, culturaland economic policy goals of that country. This raises questionsas to the scope of clauses dealing with this issue. Do theyaim to prevent TNCs from any involvement in the politicalprocesses of the countries in which they invest, or do theymerely prevent improper involvement, e.g. where a particularactivity is i l legal under the law of the country concerned?

As noted in section I, the draft United Nations Codeof Conduct contains a section addressing the “Activities ofTransnational Corporations ”. The standards for TNC’s activitieswhich are stressed, in relation to social and political obligations,are the following:

• respect for national sovereignty and observance of domesticlaws, regulations and administrative practices;

• review and renegotiation of contracts;• adherence to socio-cultural objectives and values;• non-collaboration by TNCs with racist minority regimes

in southern Africa;• non-interference in internal political affairs; and• non-interference in intergovernmental relations.

Similarly, the OECD’s Guidelines for MultinationalEnterprises are directly addressed to TNCs (OECD, 2000a).As can be seen in box 2, the revised Guidelines mention anumber of general social obligations that should be observedby TNCs in their dealings with the countries in which theyoperate . Each obligation is subject to a general duty onenterprises to take fully into account established policiesin the countries in which they operate, and to consider the

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views of other stakeholders. On the specific question of socialand political obligations, point 11 of the General PoliciesGuidelines states that enterprises should “abstain from anyimproper involvement in local political activities”. This includes(point 6 of the section on “Combating Bribery”) that enterprisesshould“ not make illegal contributions to candidates for publicoffice or to political parties or to other political organisations.Contributions should fully comply with public disclosurerequirements and should be reported to senior management”.These norms re-emphasise the obligation of TNCs to respectlegitimate forms of political behaviour. However theCommentary on the Guidelines is silent on the scope andmeaning of this duty. Thus there is little guidance as to theeffect of this provision.

In addition, another non-binding code, the Asia PacificEconomic Cooperation (APEC) Non-Binding InvestmentPrinciples, states, under the heading of “Investor Behaviour”:

“Acceptance of foreign investment is facilitated whenforeign investors abide by the host economy’s laws,regulations, administrative guidelines and policies,just as domestic investors should ” .

Apart from the above mentioned codes, relatively fewIIAs expressly include a provision on polit ical or socialresponsibili ty. One example arises from the Agreement onPromotion, Protection and Guarantee of Investments AmongMember States of the Organisation of the Islamic Conference(1981). Under Article 9 thereof:

“The investor shall be bound by the laws andregulations in force in the host state and shall refrainfrom all acts that may disturb public order or moralsor that may be prejudicial to the public interest. Heis also to refrain from exercising restrictive practicesand from trying to achieve gains through unlawfulmeans.”



In addition, the Community Investment Code of the EconomicCommunity of the Great Lakes Countries (CEPGL) (1982),Article 21, provides that authorization for inclusion underits regime of advantages for Community enterprises doesnot exempt an authorized enterprise from compliance withthe political, financial, fiscal and social legislation of the hostcountry.

Certain codes developed by civil society groups alsoaddress the issue of social and political obligations of TNCs.Thus, the World Development Movement’s Core Standardsinclude a section requiring TNCs to respect every State’s rightto choose its own economic system and to regulate foreigninvestment and the activities of TNCs within its jurisdiction.Similarly, the PAN draft NGO Charter on TransnationalCorporat ions requires that TNCs operate in harmony withthe local economy and culture. This involves duties to observestr ict ly the laws, regulat ions and administrat ive practicesof a country or international standards regarding pollutioncontrols, environmental protection, consumer protection andlabour rights where that country’s laws and regulations arenot up to (or on par with) such standards; to respect the socialand cultural values and customs of the locality where a TNCoperates; and to refrain from political and illegal activity,such as bribery.

Finally, mention should be made of certainintergovernmental instruments that have imposed obligationson TNCs to refrain from doing business in host countriesthat are pursuing internationally unacceptable policies, suchas systematic denial of human rights or discrimination. Ofparticular historical note in this regard are the various UnitedNations resolutions instituting an economic boycott of SouthAfrica and other racist regimes in southern Africa that pursuedapartheid policies. A similar approach was taken by theEuropean Union which adopted a code of conduct concerningbusiness with South Africa (European Community, 1985). Atthe non-governmental level, a number of significant initiativeswere also taken, chief among these being, the Sullivan Principles(Sullivan, 1977).

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C. Consumer protection

The growing internationalization of business has ledto the creation of a transnational dimension to the alreadywell-established issue of consumer protection. As businesscrosses borders in search of new markets and cus tomers ,problems of good corporate practice towards consumers follow.This issue can become more salient in the context of developingcountries that may not have the resources or the regulatorystructure to deal effectively with such matters. The resultmay be an enhanced risk of abuse of consumer rights. In thesecircumstances, a measure of co-ordinated international actionmay be necessary. Equally, a harmonization of consumerprotection standards across national boundaries may benecessary on efficiency grounds, so that firms will need toobserve only one universal set of standards, and as a stimulantto market integration, through the greater ease of compliancewith national standards that follows from such harmonization.

In this connection, the European Union (albeit,admittedly, a special situation) has developed a number ofinstruments on consumer protect ion. These wil l only bediscussed briefly in this section, but nonetheless they representthe most developed supra-national scheme of consumerprotection in existence. The European Union instruments arebased on the terms st ipulated in Article 153 of the Treatyestablishing the European Community under title XIV, onConsumer Protection, which states that the Community shall“contribute to protecting health, safety and economic interestsof consumers, as well as to promoting their right to information,education and to organise themselves in order to safeguardtheir interests” (European Commission, 1997, p. 109).

The European Union instruments on consumerprotection can be divided between legislative directives dealingwith the protection of economic interests of consumers andthe protection of their safety, and non–legislative directivesthat are mostly made up of act ions with budgetary



consequences. More specifically, the European Union directiveshave concentrated on the fol lowing key areas:

1. Safety and liability.2. Directives concerning the protection of economic interests

such as:• misleading and comparative advertising;• price indication;

• contracts negotiated away from business premises(doorstep selling);

• package travel;• unfair contract terms;• timeshare contracts; and• distance contracts.

3. Financial services.4. Access to justice.5. Consumer representation, information and education.6. Links of consumer policy with other European Union

policies.

The United Nations has also developed a set ofGuidelines for Consumer Protection. These Guidelines wereadopted by the 1985 United Nations General Assembly(Resolution 39/248), in order to protect consumers, particularlythose in developing countries. As a General Assemblyresolution, the Guidelines were mainly drafted to adviseGovernments on how best to protect consumers. The languageused in the Guidelines is therefore not mandatory.

The Guidelines’ main objectives are:

(a) “To assist countries in achieving or maintainingadequate protection for their population as consumers;

(b) To facilitate production and distribution patternsresponsive to the needs and desires of consumers;

(c) To encourage high levels of ethical conduct for thoseengaged in the production and distribution of goodsand services to consumers;

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(d) To assist countries in curbing abusive businesspractices by all enterprises at the national andinternational levels which adversely affect consumers;

(e) To facilitate the development of independent consumergroups;

(f) To further international co-operation in the field ofconsumer protection;

(g) To encourage the development of market conditionswhich provide consumers with greater choice at lowerprices ”.

The General principles provided in the Guidelinesare the following:

(a) “the protection of consumers from hazards to theirhealth and safety;

(b) the promotion and protection of the economic interestsof consumers;

(c) access of consumers to adequate information to enablethem to make informed choices according toindividual wishes and needs;

(d) consumer education;(e) availability of effective consumer redress; and(f) freedom to form consumer and other relevant groups

or organizations and the opportunity of suchorganizations to present their views in decision-making processes affecting them”.

The development, implementation and monitoringstages of national consumer policies are left to Governments,which are urged to fol low the standards contained in theGuidelines in order to achieve stronger protection policies.

The 2000 OECD Guidelines for MultinationalEnterprises complement the United Nations Guidelines, inthat chapter VII of the Guidelines deals with the responsibilitiesof TNCs with respect to the protection of consumer interests(box 5).



Box 5. OECD Guidelines for Multinational Enterprisesand the protection of consumer interests

“VII. Consumer Interests

When dealing with consumers, enterprises should act in accordancewith fair business, marketing and advertising practices and should takeall reasonable steps to ensure the safety and quality of the goods orservices they provide. In particular, they should:

1. Ensure that the goods or services they provide meet all agreedor legally required standards for consumer health and safety,including health warnings and product safety and informationlabels.

2. As appropriate to the goods or services, provide accurate andclear information regarding their content, safe use, maintenance,storage, and disposal suf f ic ient to enable consumersto make informed decisions.

3. Provide transparent and effective procedures that addressconsumer complaints and contribute to fair and timely resolutionof consumer disputes without undue cost or burden.

4. Not make representations or omissions, nor engage in any otherpractices, that are deceptive, misleading, fraudulent, or unfair.

5. Respect consumer privacy and provide protection for personaldata.

6. Co-operate fully and in a transparent manner with publicauthorities in the prevention or removal of serious threats topublic health and safety deriving from the consumption or useof their products.”

Source: OECD, 2000a, p. 7.

The f irs t reference to consumer interests was madein the OECD Guidelines in 1984, which reflected theincreasingly internationalised aspects of consumer protectionpolicies and laws in terms of product packaging, marketingand sales, and product safety (OECD, 2000b). This development,coupled with the continuing recognition of the issue ofconsumer protection by TNCs (as manifested by the emphasis

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placed on it in corporate policies and management practices),led to the addition of the chapter in 2000.

The United Nations Guidelines can also be readalongside the Consumer Charter for Global Business of 1995,produced by the NGO Consumers Internat ional . I t coversmuch of the same ground as the United Nations Guidelinesand includes provisions on ethical business conduct carriedout in the interests of consumers, fair competit ion, propermarketing practices, product s tandards and labell ing. Inaddit ion, consumers have a r ight to expect appropriateinformation as to s torage and disposal of products , theestablishment of informal systems for the redress of complaintsand the provision of proper guarantees. Other NGOs havealso referred to the protection of consumers in their codeson TNC responsibili t ies (see PAN Draft NGO Charter onTransnational Corporations paragraph 12; Consumer Unityand Trust Society International Agreement on InvestmentArticle 1.F; World Development Movement’s Core Standards“Consumer Protection”) . In a similar vein, the ICC has issuedits own codes on market ing. These cover inter al ia d i rec tmarketing, advertising practice, environmental advertising,sales promotion and sponsorship (ICC, 2000).

A further noteworthy development has been theadoption of certain issue-specific codes by intergovernmentalorganizations, designed to deal with issues of direct concernto consumers in the field under scrutiny. Such codes establishinternationally agreed standards, usually aimed more directlyat enterprises. A number of issue areas have been covered.These include:

• Breast-milk substitutes. Perhaps best-known is the WHO’sInternational Code of Marketing of Breast-milk Substitutes.This Code was adopted by the Thirty-fourth World HealthAssembly in 1981, after it had been discovered that theuse of Western style breast-milk substitutes in the lesshygienic conditions of developing countries could beharmful to the good health of infants, and after a concertedcampaign by civil society groups targeted at the TNCs



responsible for the marketing and sale of this productto mothers in developing countries. The Code recognisedthat the encouragement and protection of breast-feedingis an important part of the health, nutrition and othersocial measures required to promote healthy growth anddevelopment of infants and young children. Therefore,the aim of the Code, as stated in the first article, is to:

“contribute to the provisions of safe and adequate nutritionfor infants, by the protection and promotion of breast-feeding, and by ensuring the proper use of breast-milksubstitutes, when these are necessary, on the basis ofadequate information and through appropriate marketingand distribution. The Code applies to the marketing, andpractices related thereto, of the following products: breast-milk substitutes, including infant formula; other milkproducts, foods and beverages, including bottle-fedcomplementary foods, when marketed or otherwiserepresented to be suitable, with or without modification,for use as a partial or total replacement of breast-milk;feeding bottles and teats. It also applies to their qualityand availability, and to information concerning their use. ”

The United Nations Children’s Fund (UNICEF) has beenactive in assisting with its monitoring, mainly by NGOs(Chetley, 1986; IBFAN, 1994).

• Pesticides. The Food and Agriculture Organization of theUnited Nations (FAO) has long been involved in developingtechnical standards and codes, several of which haveimportant social and environmental aspects. Its InternationalCode of Conduct on the Distribution and Use of Pesticides(adopted in 1985) established voluntary standards ofconduct for all public and private entities involved withthe distribution and use of pesticides, particularly incountries with national laws inadequate for regulatingpesticides. The Code is based on the shared responsibilityof all segments of society, and upon a co-operative effortbetween Governments of pesticide-exporting and importingcountries. Initially, the Code was developed to address

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certain issues associated with the use of pesticides,particularly in developing countries where adequateregulatory infrastructures are frequently lacking. It wasrecognized, however:

“that in order to remain relevant the Code must evolvein order to reflect changing needs of countries and thatthere was a need to monitor progress in the observanceof the Code. The objectives of the Code are to set forthresponsibilities and establish voluntary standards of conductfor all public and private entities engaged in or affectingthe distribution and use of pesticides. The Code suggestshow to distribute the responsibilities between government,industry and others. The twelve articles of the Code aresupported by a set of detailed technical guidelines whichprovide guidance on their implementation” (FAO, 1990,p. 2).

• Hazardous chemicals and pesticides. Most recently, inconjunction with the United Nations EnvironmentProgramme (UNEP), FAO has developed the Conventionon the Prior Informed Consent (PIC) Procedure for CertainHazardous Chemicals and Pesticides in International Trade,agreed and opened for signature in September 1998 (UNEP/FAO, 1998). Though addressed to Governments, thisinitiative aims to influence the conduct of TNCs. The PICprocedure is:

“a means for formally obtaining and disseminatingthe decisions of importing countries as to whetherthey wish to receive future shipments of a certainchemical and for ensuring compliance to thesedecisions by exporting countries. The aim is to promotea shared responsibility between exporting andimporting countries in protecting human health andthe environment from the harmful effects of suchchemicals. The Convention contains provisions forthe exchange of information among Parties aboutpotentially hazardous chemicals that may be exportedand imported and provides for a national decision-



making process regarding import and complianceby exporters with these decisions ” (ibid., p. 2).

• Tobacco. More recently, the WHO has called for work tobegin on a Framework Convention on Tobacco Controlwhich would contain inter alia rules relating to issues thatinvolve regulation of the activities of tobacco corporations,including tobacco advertising and promotion, especiallyin relation to young persons and children, agriculturaldiversification, smuggling, taxes and subsidies (WHO,1999). The Framework Convention is meant to becomean international legal instrument that will circumscribethe global spread of tobacco and tobacco products. It isbeing developed by WHO’s 191 member States, so as toensure that their concerns are adequately reflectedthroughout the process. Protocols are envisaged as separateagreements to cover the substantive part of the Convention.

• Food safety. Brief mention should be made of the FAOand WHO Codex Alimentarius. Although not entirelyuncontroversial, this extensive Code seeks to set globalstandards for the elaboration and establishment ofdefinitions and requirements for foods, to assist in theirharmonization and, in doing so, facilitate internationaltrade. Not only are standard definitions of foods developed,but also standards concerning food labelling and principlesof food hygiene. The Codex is expressly mentioned inparagraph 39 of the United Nations Guidelines forConsumer Protection as the source of consumer protectionstandards in the field of food policy. The WTO hasrecognized Codex standards as the international referencefor settling disputes in relation to food safety issues. Thoughaddressed to member Governments of the FAO and WHO,the Codex influences the conduct of TNCs in the foodindustry (FAO/WHO, 1999).

• Electronic commerce . Another initiative undertaken bythe OECD was the adoption, in 1999, of the Guidelinesfor Consumer Protection in the Context of ElectronicCommerce. This aims to assist Governments to formulate

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consumer policies for electronic commerce and outlinesinformation disclosure requirements to protect consumers.In particular the Guidelines require that consumers whoparticipate in electronic commerce should be affordedtransparent and effective consumer protection that is noless than the level of protection afforded in other formsof commerce. To this end, the Guidelines recommend thatbusinesses engaged in electronic commerce should paydue regard to fair business, advertising and marketingpractices; provide accurate, clear and easily accessibleinformation about themselves to allow for identificationof their business, prompt, easy and effective consumercommunication with the business, appropriate and effectivedispute resolution, service of legal process and locationof the business for regulatory purposes; offer sufficientinformation about the goods or services offered so asto enable consumers to make an informed decision aboutentry into a transaction; offer sufficient information aboutthe terms, conditions and costs associated with thetransaction; provide an effective confirmation process forthe transaction in question; provide easy-to-use and securepayment mechanisms and information as to thesemechanisms; and provide access to fair, timely andaffordable alternative dispute settlement mechanisms.Furthermore, electronic commerce transactions shouldbe carried out in accordance with recognized privacyprinciples. Finally, Governments are expected to carryout programmes of consumer education in this field, toreview and promote self-regulation by private business,and to cooperate with other countries in the developmentof regulatory environments (OECD, 1999b).

• Protection of personal data on consumers. Closely linkedto the development of standards in relation to electroniccommerce are initiatives to secure privacy and securityin relation to electronic data stored and processed by firms.Thus in 1981 the Council of Europe adopted a Conventionfor the Protection of Individuals with Regard to AutomaticProcessing of Personal Data. The European Parliamentand Council issued a Directive in this field in 1995 (Council



of the European Union, 1995). For its part, the OECD issuedin 1998 a Ministerial Declaration on the Protection of Privacyon Global Networks (OECD, 1998).

• Pharmaceutical products. The International Federationof Pharmaceutical Manufacturers Associations (IFPMA)adopted, in 1981, a voluntary Code of PharmaceuticalMarketing Practices. Its aim is to “promote and supportcontinuous development throughout the pharmaceuticalindustry of ethical principles and practices voluntarilyagreed on” (IFPMA, 1994, p. 1). To this end, it sets standardsfor promotional material that seek to ensure its accuracy,fairness and objectivity so as to ensure not only conformitywith legal requirements, but also adherence to high ethicalstandards and to good taste.

• Quality assurance. Apart from the above-mentioned codes,the series of generic technical standards developed bythe International Standardization Organisation (ISO) areworthy of special note: ISO 9000, for quality assurancemanagement (to ensure products conform to customers’requirements), and ISO 14000 for environmental systemmanagement (to eliminate the harmful environmentalimpact of enterprise activities) (ISO 1999). However, thesefocus on management systems rather than measuring actualperformance. Implementation is not the direct responsibilityof ISO itself, but certification is carried out by its nationalmember organizations, usually through accredited bodies.Though not specifically addressed to TNCs, these codesare relevant since they offer guidance to TNCs on thedevelopment of their quality assurance systems.

• Social accountability. The ISO approach has also beenadopted by the United States based Council for EconomicPriorities. It has launched “Social Accountability 8000”(SA8000), also as a management system standard. TheSA8000 system is based on ISO 9000, which is widely usedby companies to ensure quality control. The auditingtechniques of ISO include:

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“specifying corrective and preventive actions;encouraging continuous improvement; and focusingon management systems and documentation provingthese systems’ effectiveness. In addition, the SA8000system includes three elements essential for socialaud i t ing :

(a) Specific performance standards set withminimum requirements;

(b) Auditors are required to consult with and learnfrom interested parties, such as NGOs, tradeunions and, of course, workers; and

(c) A complaints and appeals mechanism allowsindividual workers, organizations, and otherinterested parties to bring forward issues ofnoncompliance at certified facilities” (CEPAA,2000, p. 3).

D. Emerging issues

Certain new issues are emerging in the practice ofcorporations, industry organizations, Governments and civilsociety that may influence the future content of provisionsin IIAs on the social responsibil i ty of corporations. Theyinclude, most importantly, corporate governance, ethicalbusiness practices and the need for TNCs and domestic firmsto observe fundamental principles of human rights in theiroperations. Indeed, all three issues appear prominently inthe General Policies chapter of the 2000 OECD Guidelinesfor Multinational Enterprises (box 2).

1. Corporate governance

The “Principles of Corporate Governance” were adoptedby the OECD Council in May 1999. Expressed in general terms,these are aimed at providing guidance to Governments, publicbodies and companies in their efforts to evaluate and improvethe legal, institutional and regulatory framework for corporate



governance in their countries. The OECD Principles concentrateo n :

“governance problems that result from the separationof ownership and control. Some of the other issuesrelevant to a company’s decision-making process,such as environmental or ethical concerns, are takeninto account but are treated more explicitly in anumber of other OECD instruments (including theGuidelines for Multinational Enterprises and theConvention and Recommendation on Bribery) andthe instruments of other international organisations”(Preamble).

Against this background, the OECD Principles contain thefollowing provisions on corporate governance that can beseen as relating to social responsibility:

• The corporate governance framework should ensure theequitable treatment of all shareholders, including minorityand foreign shareholders. All shareholders should havethe opportunity to obtain effective redress for violationof their rights.

• The corporate governance framework should recognizethe rights of stakeholders as established by law andencourage active cooperation between corporations andstakeholders in creating wealth, jobs and the sustainabilityof financially sound enterprises.

• The corporate governance framework should ensure thattimely and accurate disclosure is made on all materialmatters regarding a corporation, including the financialsituation, performance, ownership, and governance ofthe company. The disclosure framework of the OECDGuidelines on Multinational Enterprises is relevant inthis context.

• Risks related to environmental liabilities should bedisclosed.

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• Information relating to human resource policies, such asprogrammes for human resource development or employeeownership plans, should be disclosed as these cancommunicate important information on the competitivestrengths of companies to market participants.

2. Ethical business standards

The developments discussed in section I have givena new impetus to various types of corporate codes, some ofwhich have a long history. Although such codes are voluntaryrather than legally binding requirements, they are often theresult of social pressures, and are adopted in response toreal or perceived threats of social sanctions or legislativeaction. Furthermore, they may incorporate or refer to standardsthat have some legal status; they may be monitored or enforcedby often sophisticated auditing procedures; and non-compliancemay potentially entail harmful or damaging consequences,such as loss of contracts and damaging publicity. Codes maybe formulated and adopted by an individual firm, but sets tandards of conduct to apply not only throughout a f i rmand its foreign affiliates, but also to its entire supply chain,sometimes involving thousands of contractors andsubcontractors, often in many countries. These can thereforehave widespread effects if adopted, for example, by largeretail trading firms, perhaps responding to consumer pressures.Industry codes may cover enterprises based in several homecountries, as well as affiliates and contractual suppliers inmany host countr ies .

Codes of this type have been adopted by companiesin almost all OECD countries (Kline, 1985; Kolk, van Tulderand Welters, 1999; Gordon and Miyake, 1999; see also OECD,1999a). Some schemes may spread by being adopted in manyhost countries, often through international action. Thus, theResponsible Care scheme originated by the ChemicalManufacturers Association in the United States was spreadthrough the International Council of Chemical Associationsinto over 40 countr ies . In many respects , therefore , the



emergence of codes laying down social responsibility standardsseems to be an international phenomenon, linked to the trendsof privatization, deregulation and liberalization of the presentphase of globalization (UNCTAD, 1999a). Examples of suchcodes dealing generally with ethical business standards arelisted in box 6.

Box 6. Examples of ethical codes of conduct

The following are examples of various codes. They are presentedwithout examining their economic or other implications, merely asexamples of what is emerging in this field.

Corporate codes:

• The General Mills Statement of Corporate Responsibility 1994(UNCTAD, 1994, p. 317).

• The Caterpillar Code of Worldwide Business Product andOperating Principles 1992 (UNCTAD, 1994, p. 319).

• Levi-Strauss Business Partner Terms of Engagement andGuidelines for Country Selection 1994 (UNCTAD, 1994, p.325).

• More recently, the United Kingdom food retailer J. Sainsbury &Co established a code for the monitoring of ethical businesspractices on the part of suppliers of its “own brand” goods (Friddand Sainsbury, 1999).

Industry codes may be adopted by coalitions of firms, or by anindustry association (sectoral and multisectoral):

• Some of these codes originate from concerns specific to anindustry, such as the environmental impact of mining, the rightsof indigenous people in relation to land use by agricultural orextractive industries, health and safety in chemicals production,the exploitation of children or other workers in clothingmanufacture; privacy, intellectual property rights and ethicalbusiness practices in Internet commerce. But a code’s contentmay extend beyond such direct concerns.

/...

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Box 6 (continued)

• Other codes are issued by general business associations,including international organisations, such as the InternationalChamber of Commerce. For example, it has drawn up ethicalmarketing codes such as its International Code of EnvironmentalAdvertising (ICC, 1991).

Third-party codes may be issued by public interest groups, or bytrade unions (especially the international trade secretariats), sometimesworking together. Thus, some International Trade Secretariats havenegotiated codes focusing mainly, but not exclusively, on labour rights,either directly with TNCs, or jointly with NGOs and covering specificindustries:

• The International Metalworkers’ Federation has a Model Codeof Conduct for TNCs, which is being discussed with individualfirms through their World Union Committees (IMF, 1997). It isderived from the ICFTU/ITS Basic Code of Labour Practice(ICFTU/ITS, 1997).

• A Code on Clean and Safe Drinking Water has been establishedin a common effort of companies providing the public serviceof supplying clean and safe drinking water to communities, andtrade unions organising water workers affiliated to the PublicService International (PSI), to address issues related to publicservice obligations, democratic regulation, environmentalstandards and fair labour practices (PSI, 1999).

• Following publicity about child labour used for stitching footballsto be used in the World Cup, the Fédération Internationale deFootball Association (FIFA), in conjunction with internationaltrade union bodies and other organisations, developed a codeand agreement aimed at eliminating this practice (Kearney,1999, p. 219).

Government codes. Governments have also often been involvedin the encouragement of corporate codes. For example, the UnitedStates Apparel Industry Partnership was encouraged by the White

/...



Box 6 (concluded)

House; the Governments of Australia and New Zealand have producedguides to the development of codes; and the Government of Canadahas encouraged, through the Office of Consumer Affairs of IndustryCanada, effective codes and implementation processes. One significantexample of a governmental code on ethical business practices is theUnited Kingdom’s Ethical Trading Initiative (ETI). This entails acommitment to a Base Code which has specifically-defined standards;these require wages and benefits to meet, at a minimum, the higherof national legal or industry benchmark standards; and an Appendixlists “relevant international standards”, including ILO conventions (ETI,1998).

Source: UNCTAD.

3. Observance of human rights

It was noted above that the draft United Nations Codeof Conduct mentioned observance of human rights by TNCsamong its substantive standards. More specifically, the draftCode mentions, in paragraph 13, the need for TNCs to respecthuman rights and fundamental freedoms in the countriesin which they operate. However, no agreement was reachedon whether this should be expressed as an obligation byincorporation of the word “shall” into the text or as a hortatorystandard expressed by the word “should ”. Equally, the 2000OECD Guidelines for Multinational Enterprises stress, as partof the General Policies to be observed by TNCs, “respect thehuman rights of those affected by their activities consistentwith the host government’s international obligations andcommitments” (OECD, 2000a, p. 3).

Also more recently, the United Nations Sub-Commissionon the Promotion and Protect ion of Human Rights hasestablished a working group on the working methods andactivit ies of TNCs and, through this body, is currentlyundertaking work towards the draft ing of a Human RightsCode of Conduct for Companies. This code foresees that it

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would apply to foreign and domestic companies al ike andwould expect companies to respect, ensure respect for, andpromote internationally recognised human rights within theirrespective spheres of activity and influence. It then goes onto elaborate more specific obligations in relation to a numberof major areas of activity, including war crimes and crimesagainst humanity, non-discrimination, slavery, forced labourandchild labour, respect for national sovereignty and selfdetermination, fundamental labour rights and environmentalrights (United Nations, 2000).

Most importantly, the United Nations SecretaryGeneral’s Global Compact (box 1) stresses the need for businessto observe the human rights contained in the UniversalDeclaration of Human Rights and the core labour standardscontained in the ILO Declaration on Fundamental Principlesand Rights at Work of 1998 (ILO, 1998). Indeed, the clearestlink between corporate social responsibility and the observanceof human rights arises in the field of labour standards. Althoughan employment issue (UNCTAD, 2000a), the relationshipbetween fundamental human rights and labour rights mustbe mentioned in this paper, given the central importance ofthis issue to the wider debate on the applicability of humanrights obligations to TNCs.

The most comprehensive set of international agreementsembodying social standards is the ILO’s International LabourCode, which consists of both legally binding conventionsand recommendations. Although ratification of the conventionsis a matter for each State, they are regarded as aspirationalin that membership of the ILO entails the obligation to establishat least basic labour rights, and members are required to reportboth on the implementation of ratified conventions and onthe progress made in relation to those that embody fundamentalrights. This has now been strengthened by the adoption ofthe Declaration on Fundamental Principles and Rights at Work.

The observance of human rights by TNCs is becomingan increasing object of discussion leading to new initiativesby NGOs. This issue is mentioned for example in:



Box 7. Human rights and labour rights

In accordance with the most central guiding policy of the ILO, the1977 ILO Tripartite Declaration of Principles Concerning MultinationalEnterprises and Social Policy (UNCTAD, 1996, vol. I, p. 89) recognizesthe right of workers to establish and to join organisations of their ownchoosing without prior authorisation, and to enjoy adequate protectionagainst anti-union discrimination in respect of their employment. Thisright appears to have the status of a fundamental human right. Thus,Article 22(1) of the International Covenant on Civil and Political Rights1966 states: “Everyone shall have the right to freedom of associationwith others, including the right to form and join trade unions for theprotection of his interests” (UNGA, 1976). Article 22(2) thenenumerates certain public interest exceptions to this principle. Thesemust be prescribed by law and may be necessary in a democraticsociety for the protection of those interests. However, Article 22(3)stresses:

“Nothing in this article shall authorize States Parties to theInternational Labour Organisation Convention in 1948concerning Freedom of Association and Protection of the Rightto Organize to take legislative measures that would prejudice,or apply the law in such a manner as to prejudice, the guaranteesprovided for in that Convention” (ibid).

This right is addressed primarily to States. As such, TNCs are notthe object of the right. It is for the Government of a host state toensure that freedom of association is observed in law and in fact. It isfor TNCs to observe the law of the land. However, foreign firms maybe in a position to take the lead in the removal of restrictions over thefreedom of association, by encouraging trade unions in their plants,and by defending their right to exist.

Source: Muchlinski, 1999, p. 471.

• The Draft NGO Charter on Transnational Corporations(paragraph 4) prepared by the People’s Action Networkto Monitor Japanese Transnational Corporations Abroadin 1998.

43

Section II


• So as to avoid the dilution of human rights standardsby way of investor protection standards, Article 1.E ofthe Indian-based Consumer and Unity Trust Society’s“International Agreement on Investment” asser ts that acontracting party shall be free to adopt or continue, withor without modification, such measures as are requiredfor securing conformity with international treaties,conventions and agreements relating to human rights.

• The Polaris Institute for the Council of Canadians, in itsdiscussion paper “Towards a Citizens MAI ” of 1998, makesit clear that investment by foreign-based corporationsis welcome, provided that it observes inter alia regulationsdesigned to enhance the economic, social and environmentalrights of citizens. Equally, in case of conflicts, internationallyagreed citizens ’ rights such as the Universal Declarationof Human Rights and its Covenants take precedence overthe rights of corporations and investors.

• The “Core Standards ” annexed to the World DevelopmentMovement’s consultation paper “Making Investment Workfor People ” of February 1999 include the followingobligations for TNCs: respect for the right to life and theright not to be tortured or subjected to cruel treatmentor arbitrary arrest; the promotion of basic human rights,ensuring that they are universally and effectively observed;and ensuring that any security force working for themabide by basic standards.

• A notable recent example is the Amnesty InternationalUnited Kingdom Business Group’s “Human RightsGuidelines for Companies ” (Amnesty International, 1998).These deal inter alia with general human rights standardsas applicable to corporate operations, and with securityissues in particular (box 8).



Box 8. Amnesty International Human RightsGuidelines for Companies

According to Amnesty International:

“Companies have a direct responsibility for the impact of theiractivities on their employees, on consumers of their productsand on the communities within which they operate. This meansensuring the protection of human rights in their own operations.They also have a broad responsibility, embodied in theexpectations of civilised society and in international protocols,to use their influence to mitigate the violation of human rights.This applies whether these violations are committed bygovernments, by the forces of law and order, or by oppositiongroups in the countries where companies have a presence.”The Amnesty International Guidelines go on to note that TNCsoften also operate in countries with poor human rights records.In such cases, firms are urged to use their influence to promoterespect for human rights, given that silence might increasinglybe interpreted as providing support for oppressive regimes,which in turn might adversely influence a company’s reputation.

The Guidelines advocate the following principles as being ofimportance to companies:

• All companies should adopt an explicit policy on human rightswhich includes public support for the Universal Declaration ofHuman Rights

• All companies should ensure that any security arrangementsprotect human rights and are consistent with internationalstandards for law enforcement.

• All companies should take reasonable steps to ensure that theiroperations do not have a negative impact on the enjoyment ofhuman rights by the communities in which they operate.

• All companies should ensure that their policies and practicesprevent discrimination based on ethnic origin, gender, sex,colour, language, national or social origin, economic status,religion, political or other conscientiously held beliefs. Allcompanies should ensure that their policies and practicesprohibit the use of chattel slaves, forced labour, bonded childlabourers or coerced prison labour.

• All companies should ensure that their policies and practicesprovide for safe and healthy working conditions and products.

Source: Amnesty International, 1998, pp. 1-7.

45

Section II


* * *The preceding survey indicates that a number of IIAs

have addressed development obligations, socio politicalobligat ions and consumer protect ion obligat ions as a partof corporate social responsibility. Furthermore, new issuesare emerging in relat ion to corporate governance, ethicalbusiness s tandards and the observance of human r ights ,indicating a growing concern about corporate social obligationsnot only among civil society groups but also among TNCsthemselves. Further, there are intr icate and, sometimesindeterminate, interrelationships between binding and non-binding standards, and between international and nationaland private and public law. Thus, for example, a corporatecode adopted by a TNC distributing consumer goods indeveloped countries, and applied in i ts relationships witha network of independent suppliers in developing countries,may incorporate references to ILO conventions, which mayor may not have been ratified in the suppliers’ countries ofoperation. Even if the code is not formally regarded ascontractually binding on the suppliers, their compliance maywell be monitored as part of the normal process of supervisionof product quality, backed up by some form of third-partysocial audit; and suppliers that fail to make improvementsto ensure compliance could well lose their contracts (Friddand Sainsbury, 1999, pp. 223-224). By such means, internationalstandards, which may formally be non-binding or bindingonly on States, may effectively be enforced transnationally.It is this “sof t law” element which emerges from voluntaryinitiatives that may have an impact on the evolution ofinternational standards in the field of social responsibility.

Section III

INTERACTIONS ACROSS ISSUESAND CONCEPTS

This section examines how social responsibility issues— in wha teve r i n s t rumen t o r ag reemen t t hey may beaddressed — tend to interact with other issues and conceptscovered by th is Ser ies ( table 1) .

Table 1. Interaction across issues and concepts

Concepts in other papers Social responsibility

Scope and definition +Admission and establishment +Incentives +Investment-related trade measures +Most-favoured-nation treatment +National treatment +Fair and equitable treatment 0Taxation ++Transfer pricing ++Competition ++Transfer of technology ++Employment ++Environment ++Home country measures +Host country operational measures +Illicit payments ++Taking of property +State contracts +Transfer of funds +Transparency ++Dispute-settlement (investor-State) +Dispute-settlement (State-State) +

Source: UNCTAD.Key: 0 = negligible or no interaction.

+ = moderate interaction.++ = extensive interaction.



• Taxation. Taxation has a principal interactions with socialresponsibility in so far as there is a duty on TNCs to paythe taxes to which they are subject in the countries in whichthey operate (UNCTAD, 2000c). Furthermore, in relationto taxation, the 2000 OECD Guidelines state that:

“It is important that enterprises contribute to the publicfinances of host countries by making timely payment oftheir tax liabilities. In particular, enterprises should complywith the tax laws and regulations in all countries in whichthey operate and should exert every effort to act inaccordance with both the letter and spirit of those lawsand regulations. This would include such measures asproviding to the relevant authorities the informationnecessary for the correct determination of taxes to beassessed in connection with their operations and conformingtransfer pricing practices to the arm’s length principle ”(OECD, 2000a, 8 p.).

• Transfer pricing. As the preceding quotation indicates,particularly important aspect of corporate socialresponsibility for TNCs is to refrain from taking advantageof their transnational network of affiliates by engagingin the manipulation of intra-firm transfer prices so as toachieve a revenue shifting effect. Such practices may beespecially damaging to the economies of developingcountries in that they might be deprived of revenue onprofits made within their territories. The taxable profitsmade by TNCs may be a vital contribution to the revenuebase of such countries; thus any action designed to reducesuch profits through transfer pricing manipulations willreduce that revenue base to the detriment of economicand social policy funding in the developing countriesconcerned, which in turn prejudices the welfare of localpopulations. Such action may, in addition, be regardedas an unfair abuse of corporate power to the detrimentboth of local competitors who cannot engage in cross-border transfer pricing manipulations, and of local investorswho obtain less than the full market return on theinvestment in that this would be calculated on the basis

49

Section III


of the artificially lower returns declared by the TNC afterit has shifted profits out of the jurisdiction in question(UNCTAD, 1999c).

• Competition . The principal interaction between socialresponsibility and competition issues concerns the obligationfor TNCs not to abuse their market power in a way thatviolates competition rules as this may undermine thecompetitive position of smaller firms operating in thelocal market and thereby adversely affect local employment,business interests and development. The control of anti-competitive practices has a further social dynamic in thatit prevents the abuse of consumers through monopolisingpricing practices and the prevention of choice in marketsthrough the erection of barriers to competition from otherfirms. Such regulation may be especially important inrelation to developing countries whose ability to protectthemselves from anti-competitive restrictive businesspractices may be hindered owing to inadequate resources(UNCTAD, forthcoming a). Thus a regulatory gap couldbe reduced by way of cooperation and technical assistancein competition matters under the regime of any applicableIIA. The UNCTAD Set of Multilaterally Agreed EquitablePrinciples and Rules for the Control of Restrictive BusinessPractices may serve as a model in this regard.

• Transfer of technology . The principal interaction in thisarea concerns the transfer of socially useful technologyto developing countries. This entails the transfer oftechnologies that can produce a positive impact on theproductive situation in the host country. It has been saidthat the most appropriate technology for developingcountries is labour-intensive technology as it permits theapplication of the major comparative advantage possessedby developing countries, a supply of cheap labour, toeconomic production (Helleiner, 1975). While this mayhave been true in certain countries at certain times in theireconomic history, contemporary concerns have movedon towards higher-value-added activities in developingcountries, entailing a transfer of higher-skilled work and



its attendant technologies. Nonetheless, the effects of FDIon technology transfer have been uneven (UNCTAD, 1999d).Thus TNCs should consider carefully how their investmentin developing countries can provide the most usefultechnology for economic development purposes (see furtherUNCTAD, forthcoming b). Another factor in this regardconcerns the need to transfer environmentally soundtechnology to developing countries (see further UNCTAD,forthcoming c).

• Employment . The treatment of workers by TNCs is a coreissue in the field of social responsibility. As noted at thebeginning of this paper, the rights of workers have beengiven a leading place in the development of internationalobligations to be observed by TNCs by the Secretary-Generalof the United Nations. This issue is further discussed inthe separate paper on employment (UNCTAD, 2000a).

• Environment. The observance by TNCs of environmentalprotection standards has also been given prominence bythe Secretary-General of the United Nations. Theresponsibilities of TNCs in this regard can be listed asrelating to the observance of sustainable developmentprinciples in the conduct of their operations, and to ensurethe transfer of environmentally sound technologies andmanagement practices, especially to developing countries.These matters are further discussed in the paper onenvironment (UNCTAD, forthcoming c).

• Illicit payments . Another issue of social responsibilitythat has a long history is bribery and corruption. In thelight of recent developments culminating in the Conventionon Corruption drawn up by the Organization of AmericanStates and the OECD Convention on Combating Briberyof Foreign Public Officials in International BusinessTransactions, it is clear that a major aspect of corporatesocial responsibility is for firms to refrain from the makingof illicit payments to public officials. This issue is furtherconsidered in the paper on illicit payments (UNCTAD,forthcoming d).

51

Section III


• Transparency. A crucial aspect in the effective regulationof corporate social responsibility is the provision of clearand transparent information about the activities of anenterprise. In developed countries, this may be ensuredby a comprehensive code of disclosure backed up by anadministrative enforcement system and sanctions for non-compliance. In the context of developing countries, whileformal legal rules may require full and fair disclosure,the resources may not always be available for enforcement.Accordingly, TNCs may have a strong social obligationto offer full and useful disclosure about their activitiesin accordance with the standards set in internationalinstruments and in the domestic laws of the countriesin which they operate. In particular, they should giveadequate information about their corporate structure andorganization, their principal product and geographicallines of business and any other information necessaryfor a full and true view of their activities to be obtainedby relevant stakeholders. These issues are further discussedin the paper on transparency (UNCTAD, forthcoming e).

CONCLUSION:

ECONOMIC AND DEVELOPMENTIMPLICATIONS AND POLICY OPTIONS

Until relatively recently, IIAs rarely included referencesto social responsibility standards. Beginning with the voluntarycodes of conduct for TNCs in the 1970s, social responsibilityissues have continued to appear on the negotiat ing agendaof IIAs. The main issues were identif ied in sections I andII of this paper. They represent a response to the growingawareness that the liberalization of international investmentcondit ions requires a corresponding assumption by firmsof certain responsibili t ies.

This evolution in the agenda of IIAs is not free fromcontroversy and debate . Thus, f rom the perspect ive ofdeveloping countries, development obligations may bedesirable, while, from the perspective of developed countries,they may be not , their preference being for marketliberalization. On the other hand, developing countries maybe concerned that the application of certain social responsibilitystandards to international business may be inimical todevelopment, by imposing inappropriate levels of social orenvironmental protection, entail ing unfair costs on poorercountries, or may be abused for protectionist purposes. I tmay well be the case that the concerns of consumers or othersocially-concerned groups in developed countries stimulateunilateral initiatives, which may take li t t le account of thepractical si tuation of those in developing countries whomthey are intended to help. At the same time, the pressuresof economic competi t ion result ing from increasing globaleconomic integrat ion may resul t in the adoption of short-sighted business practices, imposing high social costs thatare themselves inimical to development. Thus, for example,low business awareness of good environmental protect ionpract ices can impose high costs for energy generat ion, or



environmental clean-up. Furthermore, the adoption of bestpractices is often good business: for example, producers offood or consumer products are more likely to build a favourablereputation in world markets by adopting high standards ofsafety and quality, as well as good terms and conditions ofemployment for their workforce. Nevertheless, it is importantthat social responsibili ty standards be applied in ways thatpermit sensitivity to local conditions. As noted in the OECDGuidelines on Multinational Enterprises, “Governmentsadhering to the Guidelines encourage the enterprises operatingon their territories to observe the Guidelines wherever theyoperate, while taking into account the particular circumstancesof each host country” (OECD, 2000a, p. 3). Finally, standardsthat are intended to operate internationally should bemultilaterally agreed, monitored and applied throughprocedures that are themselves transparent, accountable andsocially responsible. Implementation and monitoring areparticularly important, if effectiveness is the objective.

In the light of the preceding discussion the followingpolicy options present themselves and, as always in this Series,they may be relevant at whatever levels IIAs are being pursued:

• Option 1: No reference to social responsibility. Thisapproach is currently taken in the vast majority of IIAs,although some specific issues may be addressed. Inparticular, Bilateral Investment Treaties (BITs) are largelyrestricted to issues related to the protection of investorsand their investments. Social responsibility issues are seldomexpressly mentioned although there may be an indirectimpact of such issues on the content of investors obligations,to the extent that national laws of the contracting partiescover social responsibility questions. Given that most BITscontain a reference to the entry of investors and investmentsin accordance with the laws and regulations of the receivingcontracting party, where such laws and regulations coversocial responsibility issues they will extend to foreigninvestors from the other contracting party as well, providedthat they apply in a manner consistent with the non-

55

Conclusion


discrimination provisions of an agreement. Thus bothforeign and domestic investors would be equally subjectto the social responsibility requirements of a host country’slaws. However, apart from such an indirect effect, BITsdo not in general aim to introduce social responsibilityissues into their express provisions.

• Option 2: Non-binding social responsibility standardsincluded in an agreement. Where the parties to an IIAaccept the need for a reference to social responsibilityissues, but are not prepared to introduce binding rulesin this area, one option is to introduce these issues intoa non-binding section of the agreement. This was proposedin relation to the draft Multilateral Agreement on Investment(MAI) where the OECD Guidelines on MultinationalEnterprises could have been included as a non-bindingannex to the main agreement.

This has the advantage of avoiding possible negotiatingproblems that would arise in relation to binding rules.In particular, it might be easier for countries fearing theprotectionist abuse of certain social responsibility standardsto accept them if they were not legally binding. Equally,business fears of being subjected to legal accountabilityfor their observance of certain social responsibilityobligations would be allayed. Furthermore, the use ofnon-binding standards leaves open the possibility thata moral obligation to observe those standards would arise,perhaps because of monitoring by civil society groups.In this way “soft law” would be created and, eventually,might crystallize into “hard law ”.

On the other hand, such an approach fails to meet thecriticism that a pure investor/investment promotion andprotection agreement is unbalanced since it fails to meetthe legitimate social concerns generated by internationallymobile TNCs, while at the same time giving them rightsand privileges in relation to the countries in which theyoperate.



• Option 3: Reservation of regulatory powers in relationto social responsibility issues . As investment liberalizationand protection measures have increasingly been embodiedin binding instruments, a variety of means have been usedboth to limit the restrictions they impose on nationalmeasures involving social responsibility and to permitor encourage the adoption and application of non-bindingsocial responsibility standards. Thus, host countries mayseek to replace traditional investment scrutiny procedureswith regulatory arrangements that are non-discriminatoryor otherwise compatible with trade and investment treaties.This may entail the use of exclusions and exceptions frominvestor protection standards, which serve to protect ahost country’s discretion to regulate investors andinvestments in the light of social responsibility standards.The effects of general obligations in an investmentagreement may be limited by the specific national exceptionsthat a party may be permitted to make. In the case of “topdown” agreements, such as the draft MAI, these wouldhave to be agreed in advance and explicitly listed, andbe subject to “standstill” and rollback” requirements.

An alternative approach is a broader general exceptionsprovision, along the lines of GATT Article XX, whichexempts national state measures under a number ofheadings, provided they do not constitute arbitrary orunjustified discrimination or a disguised restriction oninternational trade (or, in this case, investment). GATTarticle XX includes exceptions allowing States to preservetheir own social and environmental responsibility standards,notably the protection of public morals; the protectionof human, animal or plant life or health; and the protectionof national treasures of artistic, historical or archaeologicalvalue. However, the scope of such exceptions has proveduncertain or limited, since the GATT/WTO is reluctantto give carte blanche to a government to introduce measuresthat restrict trade on the basis of its unilateral standardsof social or environmental protection. This has resultedin the elaboration of more detailed agreements, notablythose on Government Procurement, Technical Barriers

57

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to Trade and Sanitary and Phytosanitary Measures (WTO,1995).

• Option 4: No lowering of standards clause . An alternativeapproach was adopted in the North American Free TradeAgreement (NAFTA), and proposed in the MAI, in responseto concerns that the relaxation of controls on investmentflows might lead to a deterioration of standards of socialand environmental protection in host countries. Thus,NAFTA provides, in Article 1114 on EnvironmentalMeasures:

“1. Nothing in this Chapter shall be construed to preventa Party from adopting, maintaining or enforcing anymeasure otherwise consistent with this Chapter that itconsiders appropriate to ensure that investment activityin its territory is undertaken in a manner sensitive toenvironmental concerns.

2. The Parties recognize that it is inappropriate to encourageinvestment by relaxing domestic health, safety orenvironmental measures. Accordingly, a Party should notwaive or otherwise derogate from, or offer to waive orotherwise derogate from, such measures as anencouragement for the establishment, acquisition, expansionor retention in its territory of an investment of an investor.If a Party considers that another Party has offered suchan encouragement, it may request consultations with theother Party and the two Parties shall consult with a viewto avoiding any such encouragement.”

In the MAI negotiations, a similar clause wasproposed, which referred also to labour standards (withproposed qualifications limiting it to “domestic ” and “core”labour standards). It should be noted that these clausesrefer to the non-lowering of standards in order to attracta particular investment, and thus do not cover a moregeneralized relaxation, or one applicable to a class ofinvestors or a particular area such as a special investmentzone.



There is no reason why this technique could notbe extended to some of the other issues mentioned insections I and II of this paper. In particular, a commitmentnot to lower consumer protection standards or rules oncorporate governance are an option. On the other hand,this approach may not be well suited to more general socialobligations imposed directly on TNCs. Examples includethe duty not to interfere in socio-political affairs or theobservance of fundamental human rights. The “no loweringof standards ” option applies to those cases in which hostcountries may be tempted to lower their social standardsso as to attract marginal inward investment. It does notapply to TNC behaviour as such. Countries may be opposedto such a clause on the grounds outlined in the introductionto this section. However, it should be made clear that thistechnique does not demand positive action to raisestandards — only that countries refrain from loweringthem. Thus a comparative advantage associated with apre-existing level of social responsibility is unlikely tobe interfered with.

• Option 5: Home country promotional measures . As partof an ongoing relationship of cooperation for development,the principal home countries of TNCs may seek to undertakepositive obligations to promote good corporate socialresponsibility on the part of their firms when operatingin developing host countries (UNCTAD, forthcoming f).These may be little more than non-binding “best efforts”commitments, although, negotiators may agree to makesuch commitments binding in appropriate cases. As notedin the introduction to this section, a non-binding hortatoryapproach is taken in the OECD Guidelines, which exhortthe OECD home countries to encourage in their turn theobservance of the Guidelines by their firms wherever theyoperate. Similarly, a precedent for home country socialresponsibility measures exists in relation to codes adoptedto set standards for TNCs operating in southern Africaduring the period of apartheid, of which the Sullivan

59

Conclusion


Principles (Sullivan, 1977) and the European Union codeare the most well known (European Community, 1985).

Alternatively, a binding commitment might be undertaken.The advantage of this approach is that firms are subjectedto home country supervision. This is likely to entail highstandards of social responsibility, where the laws andregulations of a home country maintain a comprehensivecode of social responsibility rules. The main disadvantageof this approach rests in the associated extraterritorialextension of home country laws and regulations to a hostcountry’s territory. This may often not be welcomed andmay, in certain cases, be perceived as a threat to thesovereignty of a host country. It may also stoke fears ofthe protectionist use of higher OECD regulatory standardsto hold back competition from less developed host countries.Furthermore, it does not address the related issue of whetherthe same approach would make sense if the home countryof a TNC was itself a developing country, with socialresponsibility standards different from those found inOECD legal systems.

• Option 6: Inclusion of generally binding socialresponsibility provisions into an agreement . While rare,some regional integration agreements have begun todevelop coordinated policies and to harmonize somestandards and even laws relating to social policy. TheEuropean Union, especially, has developed an activeprogramme of environmental protection laws and standards.Since the incorporation of the Social Charter into the Treatyof the European Union, employment rights and social policymore generally have begun to be the subject both ofcoordinated action and of some harmonization. Thus themost far reaching option for dealing with socialresponsibility in an IIA would be to include a legally bindingset of provisions covering some or a number of the majorissues identified as falling within this concept, for examplein the form of a detailed chapter on social responsibility.However, that might prove to be very difficult to negotiate.



Two further options present themselves:

• annexing existing instruments and/or internationalagreements to an IIA as binding provisions. This wouldraise questions of choice — which instruments and/or agreements should be included? However, in theend the crucial element is the question of whetheror not agreement can be reached on the substantivecontent of any standards.

• to establish linkages with other binding instruments.Relevant agreements standards could be associatedwith IIAs on an opt-in basis. States and enterprisescould be encouraged to sign up to a range ofagreements and codes as appropriate to their activitiesand circumstances. This would help to provide ahigher visibility for positive regulatory standards,as well as helping to authenticate both those standardsand their monitoring and compliance mechanisms.

* * *

The preceding discussion has concentrated on theprincipal techniques for dealing with social responsibili typrovisions in IIAs (l imited as they are). I t should not beforgotten, however, that — independently of what happensin relation to IIAs — work also continues on the content o fsocial responsibil i ty standards. In the international arena,that work has to date been mainly carried out by such regionalbodies as the European Union and the OECD, or by specialisedagencies, most prominently by the ILO. Of particular relevanceis also the further development of social responsibili tystandards through the Global Compact (United Nations, 1999).This allows not only a universal body of countries to beassociated with this effort, but it also offers a multidisciplinarycontext for such discussions, in that a wider range of issuescan be considered. Thus, fol lowing the lead given by theSecretary-General of the United Nations in his above-mentionedGlobal Compact, both the United Nations, i ts membership

61

Conclusion


and specialized agencies, business and civil society can cometogether and develop a new agenda for social responsibilitywhich may well influence the provisions of future IIAs.In addition to the substantive content of social responsibilitystandards, a further matter to be determined is whether, infuture, IIAs should address Governments only, leaving withthem the responsibili ty to enforce social responsibili tystandards, or whether TNCs should be direct ly addressed,thereby imposing direct duties upon them. Such an approachhas been taken in various non-binding codes discussed earlierin this paper. It remains to be seen whether binding agreementswill take this approach further.

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Sullivan, Leon (1977). “The Sullivan Principles” (Phoenix:IFESH),( http://www/revleon sullivan.org/principled/principles.htm).

United Nations (1999). “The Global Compact” (New York: UnitedNations), (http://www.unglobalcompact.org) .

________ (2000). “Proposed Draft Human Rights Code of Conductfor Companies” (New York: United Nations), United Nationsdocument, E/CN.4/Sub.2/2000/WG.2/WP.1/Add.1.25 May2000.

United Nations Conference on Trade and Development (UNCTAD)(1994). World Investment Report 1994: TransnationalCorporations, Employment and the Workplace (Geneva:United Nations), United Nations publication, Sales No.E.94.II.A.14.

________ (1996). International Investment Instruments: ACompendium, vols. I, II and III (New York and Geneva:United Nations), United Nations publications, Sales Nos.E.96.II.A.9, 10 and 11.

________ (1999a). World Investment Report 1999: Foreign DirectInvestment and the Challenge of Development (New Yorkand Geneva: United Nations), United Nations publication,Sales No. E.99.II.D.3.

________ (1999b). “The social responsibility of transnationalcorporations” (New York and Geneva: United Nations),mimeo.

________ (1999c). Transfer Pricing. UNCTAD Series on Issuesin International Investment Agreements (New York andGeneva: United Nations), United Nations publication, SalesNo. E.99.II.D.8.



________ (1999d). Foreign Direct Investment and Development.UNCTAD Series on Issues in International InvestmentAgreements. (New York and Geneva: United Nations),United Nations publication, Sales No. E.98.II.D.15.

________ (2000a). Employment. UNCTAD Series on Issues inInternational Investment Agreements (New York and Geneva:United Nations), United Nations publication, Sales No.E.00.II.D.15.

________ (2000b). International Investment Instruments: ACompendium, vols. IV and V (New York and Geneva: UnitedNations), United Nations publications, Sales Nos.E.00.II.D.13 and E.00.II.D.14.

________ (2000c). Taxation. UNCTAD Series on Issues inInternational Investment Agreements (New York and Geneva:United Nations), United Nations publication, Sales No.E.00.11.D.5.

________ (forthcoming a). Competition. UNCTAD Series onIssues in International Investment Agreements (New Yorkand Geneva: United Nations), United Nations publication.

________ (forthcoming b). Transfer of Technology . UNCTADSeries on Issues in International Investment Agreements(New York and Geneva: United Nations), United Nationspublication.

________ (forthcoming c). Environment. UNCTAD Series onIssues in International Investment Agreements (New Yorkand Geneva: United Nations), United Nations publication.

________ (forthcoming d). Illicit Payments . UNCTAD Serieson Issues in International Investment Agreements (NewYork and Geneva: United Nations), United Nationspublication.

69

References


________ (forthcoming e). Transparency . UNCTAD Series onIssues in International Investment Agreements (New Yorkand Geneva: United Nations), United Nations publication.

________ (forthcoming f). Home Country Measures. UNCTADSeries on Issues in International Investment Agreements(New York and Geneva: United Nations), United Nationspublication.

United Nations General Assembly (UNGA) (1976). “TheInternational Covenant on Civil and Political Rights(ICCPR)” (Opened for signature on December 19, 1996),(http://www.pch.gc.ca/ddp-hrd/english/iccpc/CN-6.htm).

United Nations Environment Programme (UNEP) and Food andAgriculture Organization of the United Nations (FAO)(1998). “Final Act of the Conference of Plenipotentiarieson the Convention on Certain Hazardous Chemicals andPesticides in International Trade” (Rome: UNEP/FAO)(UNEP/FAO/PIC/CONF/5).

World Health Organization (WHO) (1999). “The FrameworkConvention on Tobacco Control” (Geneva: WHO), (http://www.who.org/toh/fctc/fctcintro.htm).

World Trade Organization (WTO) (1995). The Results of theUruguay Round of Multilateral Trade Negotiations: theLegal Texts (Geneva: WTO).

Selected UNCTAD publications ontransnational corporations and foreign direct

investment

A. IIA Issues Paper Series

Home Country Measures. UNCTAD Series on Issues in InternationalInvestment Agreements.

Social Responsibility. UNCTAD Series on Issues in InternationalInvestment Agreements. 91 p. Sales No. E.01.II.D.4.

Environment. UNCTAD Series on Issues in International InvestmentAgreements. 105 p. Sales No. E.01.II.D.3. $15.

Transfer of funds. UNCTAD Series on Issues in International InvestmentAgreements. 68 p. Sales No. E.00.II.D.27. $12.

Employment. UNCTAD Series on Issues in International InvestmentAgreements. 58 p. Sales No. E.00.II.D.15. $10.

International Investment Agreements: Flexibility for Development.UNCTAD Series on Issues in International Investment Agreements.170 p. Sales No. E.00.II.D.6. $12.

Taxation. UNCTAD Series on Issues in International InvestmentAgreements. 100 p. Sales No. E.00.II.D.5. $12.

Taking of Property. UNCTAD Series on Issues in InternationalInvestment Agreements. 75p. Sales No. E.00.II.D.4. $12.

Trends in International Investment Agreements: An Overview.UNCTAD Series on Issues in International Investment Agreements.123 p. Sales No. E.99.II.D.23. $12.

Lessons from the MAI. UNCTAD Series on Issues in InternationalInvestment Agreements. 31p. Sales No. E.99.II.D.26. $12.



National Treatment. UNCTAD Series on Issues in InternationalInvestment Agreements. 75p. Sales No. E.99.II.D.16. $12.

Fair and Equitable Treatment. UNCTAD Series on Issues inInternational Investment Agreements. 66 p. Sales No.E.99.II.D.15. $12.

Investment-Related Trade Measures. UNCTAD Series on Issues inInternational Investment Agreements. 64 p. Sales No. E.99.II.D.12.$12.

Most-Favoured-Nation Treatment. UNCTAD Series on Issues inInternational Investment Agreements. 72 p. Sales No. E.99.II.D.11.$12.

Admission and Establishment. UNCTAD Series on Issues inInternational Investment Agreements. 72 p. Sales No. E.99.II.D.10.$12. (English and French).

Scope and Definition. UNCTAD Series on Issues in InternationalInvestment Agreements. 96p. Sales No. E.99.II.D.9. $12.

Transfer Pricing. UNCTAD Series on Issues in International InvestmentAgreements. 72 p. Sales No. E.99.II.D.8. $12.

Foreign Direct Investment and Development. UNCTAD Series onIssues in International Investment Agreements. 88 p. Sales No.E.98.II.D.15. $12.

B. Individual studies

Measures of the Transnationalization of Economic Activity. 93p.UNCTAD/ ITE/IIA/1. Sales No. E.01.II.D.2. $20.

The Competitiveness Challenge: Transnational Corporations andIndustrial Restructuring in Developing Countries. 283p. UNCTAD/ITE/IIT/ Misc.20. Sales No. E.00.II.D.35. $42.

73IIA issues paper series

Selected UNCTAD publications on transnationalcorporations and foreign direct investment

Investment Policy Review of Mauritius. 84 p. UNCTAD/ITE/IPC/Misc.1. Sales No. E.01.II.D.11. $22.

Investment Policy Review of Peru. 108 p. UNCTAD/ITE/IPC/Misc.19.Sales No. E.00.II.D. 7. $22.

Investment Policy Review of Ecuador. 117 p. UNCTAD/ITE/IPC/Misc.2.

Investment Policy Review of Ethiopia. 117 p. UNCTAD/ITE/IPC/Misc.4.

Tax Incentives and Foreign Direct Investment: A Global Survey.ASIT Advisory Studies, No.16. 180p.UNCTAD/ITE/IPC/Misc.3. $23.

Investment Regimes in the Arab World Issues and Policies. ASITAdvisory Studies, No.15. 232p. UNCTAD/ITE/IIP/Misc.21. $39.

The Role of Publicly Funded Research and Publicly OwnedTechnologies in the Transfer and Diffusion of EnvironmentallySound Technologies. 445 p. Sales No. E.00.II.D.37. $45.

Bilateral Investment Treaties 1959-1999. 136 p. UNCTAD/ITE/IIA/2. 143p. Also available on the internet, http://www.unctad.org/en/pub/poiteiiad2.en.htm. Free-of-charge.

World Investment Report 2000: Cross-border Mergers and Acquisitionsand Development . 337 p. Sales No. E.00.II.D.20.

World Investment Report 2000: Cross-border Mergers and Acquisitionsand Development. An overview 65 p. Free of change.

International Investment Instruments: A Compendium . Vol. IV.298 p.; Vol. V. 473 p. Sales No. E.00.II.D.13 and E.00.II.D.14. $60and $42.

FDI Determinants and TNCs Strategies: The Case of Brazil. 195p. Sales No. E.00.II.D.2, $35.



Guide d'investissement au Mali. September 2000. UNCTAD/ITE/IIT/Misc.23 (Joint publication with the International Chamber ofCommerce) Free-of-charge.

An Investment Guide to Bangladesh: Oportunities and Conditions,August 2000. UNCTAD/ITE/IIT/Misc.29 (Joint publication with theInternational Chamber of Commerce) Free-of-charge.

An Investment Guide to Ehiopia: Oportunities and Conditions, April2000. UNCTAD/ITE/IIT/Misc.19 (Joint publication with the InternationalChamber of Commerce) Free-of-charge.

World Investment Directory. Vol. VII: Asia and the Pacific 2000 .Part 1. 332 p.; Part 2. 305 p. Sales No. E.00.II.D.11. $80.

World Investment Report 1999: Foreign Direct Investment and theChallenge of Development . 536 p. Sales No. E.99.II.D.3. $ 45.

World Investment Report 1999: Foreign Direct Investment and theChallenge of Development . An Overview 75 p. Free-of-charge.

Investment Policy Review of Uganda. 75 p. Sales No. E.99.II.D.24.$15.

Investment Policy Review of Egypt. 113 p. Sales No. E.99.II.D.20.$19.

Science, Technology and Innovation Policy Review of Colombia .175 p. Sales No. E.99.II.D.13. $23.

Foreign Direct Investment in Africa: Performance and Potential .89 p. UNCTAD/ITE/IIT/Misc. 15.

Investment Policy Review of Uzbekistan . 64 p. UNCTAD/ITE/IIP/Misc. 13. Free-of-charge.

The Financial Crisis in Asia and Foreign Direct Investment: AnAssessment . 101 p. Sales No. GV.E.98.0.29. $20.



Science, Technology and Innovation Policy Review of Jamaica .172 p. Sales No. E.98.II.D.7. $42.

World Investment Report 1998: Trends and Determinants. 430 p.Sales No. E.98.II.D.5. $45.

World Investment Report 1998: Trends and Determinants. An Overview.67 p. Free-of-charge.

Bilateral Investment Treaties in the mid-1990s . 314 p. Sales No.E.98.II.D.8. $46.

Handbook on Foreign Direct Investment by Small and Medium-sized Enterprises: Lessons from Asia. 200 p. Sales No. E.98.II.D.4.$48.

Handbook on Foreign Direct Investment by Small and Medium-sized Enterprises: Lessons from Asia. Executive Summary and Reporton the Kunming Conference . 74 p. Free-of-charge.

International Investment Towards the Year 2002. 166 p. Sales No.GV.E.98.0.15. $29. (Joint publication with Invest in France Missionand Arthur Andersen, in collaboration with DATAR.)

World Investment Report 1997: Transnational Corporations, MarketStructure and Competition Policy. 420 p. Sales No. E.97.II.D.10.$45.

World Investment Report 1997: Transnational Corporations, MarketStructure and Competition Policy. An Overview. 70 p. Free-of-charge.

International Investment Towards the Year 2001 . 81 p. Sales No.GV.E.97.0.5. $35. (Joint publication with Invest in France Missionand Arthur Andersen, in collaboration with DATAR.)

World Investment Directory. Vol. VI: West Asia 1996 . 192 p. SalesNo. E.97.II.A.2. $35.

World Investment Directory. Vol. V: Africa 1996 . 508 p. Sales No.E.97.II.A.1. $75.



Sharing Asia’s Dynamism: Asian Direct Investment in the EuropeanUnion. 192 p. Sales No. E.97.II.D.1. $26.

Transnational Corporations and World Development. 656 p. ISBN0-415-08560-8 (hardback), 0-415-08561-6 (paperback). £65 (hardback),£20.00 (paperback). (Published by International Thomson BusinessPress on behalf of UNCTAD.)

Companies without Borders: Transnational Corporations in the1990s. 224 p. ISBN 0-415-12526-X. £47.50. (Published by InternationalThomson Business Press on behalf of UNCTAD.)

The New Globalism and Developing Countries . 336 p. ISBN 92-808-0944-X. $25. (Published by United Nations University Press.)

Investing in Asia’s Dynamism: European Union Direct Investmentin Asia . 124 p. ISBN 92-827-7675-1. ECU 14. (Joint publicationwith the European Commission.)

World Investment Report 1996: Investment, Trade and InternationalPolicy Arrangements. 332 p. Sales No. E.96.II.A.14. $45.

World Investment Report 1996: Investment, Trade and InternationalPolicy Arrangements. An Overview 51 p. Free-of-charge.

International Investment Instruments: A Compendium. Vol. I. 371p. Sales No. E.96.II.A.9; Vol. II. 577 p. Sales No. E.96.II.A.10; Vol.III. 389 p. Sales No. E.96.II.A.11; the 3-volume set, Sales No.E.96.II.A.12. $125.

World Investment Report 1995: Transnational Corporations andCompetitiveness . 491 p. Sales No. E.95.II.A.9. $45.

World Investment Report 1995: Transnational Corporations andCompetitiveness. An Overview . 51 p. Free-of-charge.

Accounting for Sustainable Forestry Management. A Case Study .46 p. Sales No. E.94.II.A.17. $22.

Small and Medium-sized Transnational Corporations. ExecutiveSummary and Report of the Osaka Conference . 60 p. Free-of-charge.



World Investment Report 1994: Transnational Corporations,Employment and the Workplace . 482 p. Sales No. E.94.II.A.14.$45.

World Investment Report 1994: Transnational Corporations,Employment and the Workplace. An Executive Summary . 34 p.Free-of-charge.

Liberalizing International Transactions in Services: A Handbook.182 p. Sales No. E.94.II.A.11. $45. (Joint publication with the WorldBank.)

World Investment Directory. Vol. IV: Latin America and the Caribbean.478 p. Sales No. E.94.II.A.10. $65.

Conclusions on Accounting and Reporting by TransnationalCorporations. 47 p. Sales No. E.94.II.A.9. $25.

Accounting, Valuation and Privatization. 190 p. Sales No. E.94.II.A.3.$25.

Environmental Management in Transnational Corporations: Reporton the Benchmark Corporate Environment Survey . 278 p. SalesNo. E.94.II.A.2. $29.95.

Management Consulting: A Survey of the Industry and Its LargestFirms. 100 p. Sales No. E.93.II.A.17. $25.

Transnational Corporations: A Selective Bibliography, 1991-1992.736 p. Sales No. E.93.II.A.16. $75. (English/French.)

Small and Medium-sized Transnational Corporations: Role, Impactand Policy Implications. 242 p. Sales No. E.93.II.A.15. $35.

World Investment Report 1993: Transnational Corporations andIntegrated International Production. 290 p. Sales No. E.93.II.A.14.$45.

World Investment Report 1993: Transnational Corporations andIntegrated International Production. An Executive Summary . 31p. ST/CTC/159. Free-of-charge.



Foreign Investment and Trade Linkages in Developing Countries.108 p. Sales No. E.93.II.A.12. $18.

World Investment Directory 1992. Vol. III: Developed Countries .532 p. Sales No. E.93.II.A.9. $75.

Transnational Corporations from Developing Countries: Impacton Their Home Countries . 116 p. Sales No. E.93.II.A.8. $15.

Debt-Equity Swaps and Development. 150 p. Sales No. E.93.II.A.7.$35.

From the Common Market to EC 92: Regional Economic Integrationin the European Community and Transnational Corporations. 134p. Sales No. E.93.II.A.2. $25.

World Investment Directory 1992. Vol. II: Central and Eastern Europe.432 p. Sales No. E.93.II.A.1. $65. (Joint publication with the UnitedNations Economic Commission for Europe.)

The East-West Business Directory 1991/1992 . 570 p. Sales No.E.92.II.A.20. $65.

World Investment Report 1992: Transnational Corporations as Enginesof Growth: An Executive Summary. 30 p. Sales No. E.92.II.A.24.Free-of-charge.

World Investment Report 1992: Transnational Corporations as Enginesof Growth . 356 p. Sales No.E.92.II.A.19. $45.

World Investment Directory 1992. Vol. I: Asia and the Pacific. 356p. Sales No. E.92.II.A.11. $65.

Climate Change and Transnational Corporations: Analysis andTrends . 110 p. Sales No. E.92.II.A.7. $16.50.

Foreign Direct Investment and Transfer of Technology in India .150 p. Sales No. E.92.II.A.3. $20.



The Determinants of Foreign Direct Investment: A Survey of theEvidence . 84 p. Sales No. E.92.II.A.2. $12.50.

The Impact of Trade-Related Investment Measures on Trade andDevelopment: Theory, Evidence and Policy Implications. 108 p.Sales No. E.91.II.A.19. $17.50. (Joint publication with the UnitedNations Centre on Transnational Corporations.)

Transnational Corporations and Industrial Hazards Disclosure .98 p. Sales No. E.91.II.A.18. $17.50.

Transnational Business Information: A Manual of Needs and Sources.216 p. Sales No. E.91.II.A.13. $45.

World Investment Report 1991: The Triad in Foreign Direct Investment.108 p. Sales No.E.91.II.A.12. $25.

C. Serial publications

Current Studies, Series A

No. 30. Incentives and Foreign Direct Investment . 98 p. Sales No.E.96.II.A.6. $30. (English/French.)

No. 29. Foreign Direct Investment, Trade, Aid and Migration. 100p. Sales No. E.96.II.A.8. $25. (Joint publication with the InternationalOrganization for Migration.)

No. 28. Foreign Direct Investment in Africa . 119 p. Sales No.E.95.II.A.6. $20.

No. 27. Tradability of Banking Services: Impact and Implications.195 p. Sales No. E.94.II.A.12. $50.

No. 26. Explaining and Forecasting Regional Flows of ForeignDirect Investment . 58 p. Sales No. E.94.II.A.5. $25.



No. 25. International Tradability in Insurance Services. 54 p. SalesNo. E.93.II.A.11. $20.

No. 24. Intellectual Property Rights and Foreign Direct Investment.108 p. Sales No. E.93.II.A.10. $20.

No. 23. The Transnationalization of Service Industries: An EmpiricalAnalysis of the Determinants of Foreign Direct Investment byTransnational Service Corporations. 62 p. Sales No. E.93.II.A.3.$15.

No. 22. Transnational Banks and the External Indebtedness ofDeveloping Countries: Impact of Regulatory Changes. 48 p. SalesNo. E.92.II.A.10. $12.

No. 20. Foreign Direct Investment, Debt and Home Country Policies.50 p. Sales No. E.90.II.A.16. $12.

No. 19. New Issues in the Uruguay Round of Multilateral TradeNegotiations. 52 p. Sales No. E.90.II.A.15. $12.50.

No. 18. Foreign Direct Investment and Industrial Restructuringin Mexico . 114 p. Sales No. E.92.II.A.9. $12.

No. 17. Government Policies and Foreign Direct Investment . 68p. Sales No. E.91.II.A.20. $12.50.

The United Nations Library on Transnational Corporations(Published by Routledge on behalf of the United Nations.)

Set A (Boxed set of 4 volumes. ISBN 0-415-08554-3-350):Volume One: The Theory of Transnational Corporations. 464 p.Volume Two: Transnational Corporations: A Historical Perspective.464 p.Volume Three: Transnational Corporations and EconomicDevelopment . 448 p.Volume Four: Transnational Corporations and Business Strategy .416 p.



Set B (Boxed set of 4 volumes. ISBN 0-415-08555-1-350):Volume Five: International Financial Management . 400 p.Volume Six: Organization of Transnational Corporations. 400 p.Volume Seven: Governments and Transnational Corporations. 352p.Volume Eight: Transnational Corporations and International Tradeand Payments. 320 p.

Set C (Boxed set of 4 volumes. ISBN 0-415-08556-X-350):Volume Nine: Transnational Corporations and Regional EconomicIntegration .331 p.Volume Ten: Transnational Corporations and the Exploitation ofNatural Resources . 397 p.Volume Eleven: Transnational Corporations and Industrialization .425 p.Volume Twelve: Transnational Corporations in Services . 437 p.

Set D (Boxed set of 4 volumes. ISBN 0-415-08557-8-350):Volume Thirteen: Cooperative Forms of Transnational CorporationActivity . 419 p.Volume Fourteen: Transnational Corporations: Transfer Pricingand Taxation . 330 p.Volume Fifteen: Transnational Corporations: Market Structure andIndustrial Performance . 383 p.Volume Sixteen: Transnational Corporations and Human Resources.429 p.

Set E (Boxed set of 4 volumes. ISBN 0-415-08558-6-350):Volume Seventeen: Transnational Corporations and InnovatoryActivities . 447 p.

Volume Eighteen: Transnational Corporations and Technology Transferto Developing Countries . 486 p.Volume Nineteen: Transnational Corporations and National Law .322 p.Volume Twenty: Transnational Corporations: The InternationalLegal Framework . 545 p.



D. Journals

Transnational Corporations (formerly The CTC Reporter ) .

Published three times a year. Annual subscription price: $45; individualissues $20.

ProInvest , a quarterly newsletter, available free of charge.

United Nations publications may be obtained from bookstores anddistributors throughout the world. Please consult your bookstore orwrite to:

United Nations Publications

Sales Section OR Sales SectionRoom DC2-0853 United Nations Office at GenevaUnited Nations Secretariat Palais des NationsNew York, NY 10017 CH-1211 Geneva 10U.S.A. SwitzerlandTel: (1-212) 963-8302 or Tel: (41-22) 917-1234 (800) 253-9646Fax: (1-212) 963-3489 Fax: (41-22) 917-0123E-mail: [email protected] E-mail: [email protected]

All prices are quoted in United States dollars.

For further information on the work of the Division on Investment,Technology and Enterprise Development, UNCTAD, please addressinquiries to:

United Nations Conference on Trade and DevelopmentDivision on Investment, Technology and Enterprise Development

Palais des Nations, Room E-10069CH-1211 Geneva 10

SwitzerlandTelephone:(41-22) 907-5651

Telefax:(41-22) 907-0194E-mail: [email protected]

QUESTIONNAIRE


Sales No. E.01.II.D.4

In order to improve the quality and relevance of the workof the UNCTAD Division on Investment, Technology and EnterpriseDevelopment, it would be useful to receive the views of readerson this and other similar publications. It would therefore be greatlyappreciated if you could complete the following questionnaire andreturn it to:

Readership SurveyUNCTAD Division on Investment, Technology and Enterprise

DevelopmentUnited Nations Office at Geneva

Palais des NationsRoom E-10069

CH-1211 Geneva 10Switzerland

Fax: 41-22 907-0194

1. Name and address of respondent (optional):



2. Which of the following best describes your area of work?

Government Public enterprise

Private enterprise Academic orinstitution research

Internationalorganization Media

Not-for-profitorganization Other (specify)

3. In which country do you work?

4. What is your assessment of the contents of this publication?

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5. How useful is this publication to your work?

Very useful Of some use Irrelevant

6. Please indicate the three things you liked best about thispublication:

7. Please indicate the three things you liked least about thispublication:

85

Questionnaire


8. If you have read more than the present publication of theUNCTAD Division on Investment, Technology and EnterpriseDevelopment, what is your overall assessment of them?

Consistently good Usually good, but withsome exceptions

Generally mediocre Poor

9. On the average, how useful are these publications to youin your work?

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10. Are you a regular recipient of Transnational Corporations(formerly The CTC Reporter ), the Division’s tri-annual refereedjournal?

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If not, please check here if you would like to receive a samplecopy sent to the name and address you have given above

social responsibility · the concept of corporate social responsibility is potentially very wide...

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